The New York Stock Exchange (NYSE) announced late Monday that it is scrapping its plan to delist three Chinese telecom companies with ties to the Chinese military.
It marks an abrupt reversal after NYSE said on Dec. 31 that it was in the process of delisting the three state-owned companies—China Mobile Ltd., China Telecom Corporation Ltd., and China Unicom (Hong Kong) Ltd., in compliance with President Donald Trump’s executive order (E.O.) 13959.
The NYSE said in a statement published on its website that it scrapped the plans after “further consultation with relevant regulatory authorities in connection with Office of Foreign Assets Control.”
Trump issued his executive order (pdf) on Nov. 12, 2020, banning U.S. investments in Chinese companies designated by the Pentagon as having ties to the Chinese military, citing threats to U.S. national security.
The Chinese Communist Party (CCP), through its aggressive national strategy called “Military-Civil Fusion,” uses Chinese companies to strengthen the Chinese military, formally known as the People’s Liberation Army (PLA), Trump’s executive order states.
The Trump administration in late December 2020 extended the investment ban to apply to any subsidiary of a communist Chinese military company. The Treasury Department said that it planned to publicly list subsidiaries that were “50 percent or more owned” or “determined to be controlled” by Chinese military companies.
The three Chinese telecom companies were among 35 Chinese companies identified by the Pentagon in 2020 as having links to the PLA. The designations were made under a requirement under section 1237(b) of the National Defense Authorization Act (NDAA), the annual defense spending bill.
Other Chinese companies identified by the Pentagon include telecom giant Huawei, semiconductor chipmaker SMIC, defense contractor AVIC, railcar-maker CRRC, and surveillance camera maker Hikvision. Many of the companies on the list are publicly traded on stock exchanges around the world, and millions of U.S. investors, through their pension funds, are unwittingly transferring wealth from the United States to these entities.
Before Monday night’s announcement, the NYSE had said the companies’ shares would be delisted as soon as Thursday. It had, however, maintained that the three companies had “a right to a review” the delisting decision.
Trump’s executive order has been praised by Sen. Marco Rubio (R-Fla.), who said in a Nov. 12 statement that the CCP’s “exploitation of U.S. capital markets is a clear and ongoing risk to U.S. economic and national security.”
“Today’s action by the Trump Administration is a welcome start to protecting our markets and investors,” he said on Nov. 12. “Importantly, today’s action also lays down a clear marker for U.S. policy going forward—we can never put the interests of the Chinese Communist Party and Wall Street above American workers and mom and pop investors.”
Frank Fang and Mimi Nguyen Ly contributed to this report.