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The Pentagon has not given Congress a legally required report on Chinese companies with military ties, as U.S. President Joe Biden approached a decision on whether Americans could invest in these groups.
Congress required the Department of Defense in January to file a report before April 15th. But the Pentagon told lawmakers it had not met the deadline, according to two people familiar with the report.
The delay occurred when the Biden administration decides whether to keep one executive order signed by Donald Trump, the former president, which banned Americans from investing in Chinese companies designated on a previous Pentagon blacklist.
The United States Treasury in January extended the term for the ban to take effect until May 27th. The measure was designed to give the administration time to evaluate the executive order as part of an extensive review of China-related actions taken by Trump.
Biden has taken a more hawkish posture to China than many foreign policy experts had expected.
A Pentagon spokesman did not explain the reason for the delay, but said the defense department would file the report by October.
He Financial Times reported last year, that the Pentagon had responded to pressure from Trump to compile an initial blacklist, more than two decades after Congress first ordered it. The former president used the list as a basis for his order to ban direct investments or investments through funds in companies.
In addition to telling the Pentagon to update the report each year, Congress expanded the criteria for targeting companies that help the People’s Liberation Army through “civil-military merger,” a program that requires that groups share technology with China’s armed forces. This has the potential greatly expand the scope of any investment ban.
Some U.S. lawmakers have expressed concern about the delay. Tom Cotton, an influential Republican senator from Arkansas, said it was “essential that the Department of Defense continue to focus on documenting and publicizing Chinese military companies operating in the United States.” He added that the administration needed to “defeat the Communist Party’s attempts to use our judicial system against us.”
Cotton’s comments came after the Pentagon agreed to remove Xiaomi, the Chinese smartphone maker, from the blacklist after a judge said the justification was wrong.
The White House said it was “forced” to withdraw the company after the courts found Trump the administration had failed to create a sufficient legal basis for their decision. But Emily Horne, a spokeswoman for the National Security Council, said Biden was “deeply concerned about possible US investments in companies linked to the Chinese military and is fully committed to maintaining pressure on those companies.”
John Smith, a partner at law firm Morrison & Foerster and a former U.S. Treasury official, said the administration was paralyzed. “I’m sure Biden’s team would love to throw it all away,” he said, referring to the complicated legal situation Trump had left in Biden. “They probably won’t because they can’t be seen as soft on China, nor do they want to be soft on China.”
Smith said Biden needed to work how to implement the list in a way that would not entail further judicial losses.
Eric Sayers, an Asian think tank expert at the American Enterprise Institute, said that while lawmakers were not happy with the delay in implementing the order, they should acknowledge that Biden was indicating he would maintain a stance. hard.
“The administration has indicated that it does not want to undo the effort, but rather improves it through a more rigorous coordination process,” he said. “If Congress can be patient and the effectiveness that the Biden team can rebuild the approach will be key to see this summer.”
Demetri Sevastopulo followed Twitter
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