US says 70% Chinese firms in global indices have ties with Chinese military

At least 70% of Chinese companies with connections to the Chinese army have affiliates whose securities are included in major stock indices, said the United States State Department in a statement. Reportedly, it also said that such Chinese firms are involved in the civilian as well as the military production from the money by American investors. 

While US-China relations are currently at an all-time low, US State Department said in a fact report that the ‘threat’ by the Chinese Communist Party (CCP) to American national security has penetrated the financial markets impacting the investors. As of June 22, out of 31 firms that have connections to the Chinese military had nearly 68 significant affiliated companies with shares being included on major benchmarks.

The Chinese Communist Party's threat to American national security extends into our financial markets and impacts American investors," the State Department said as quoted by ANI.

"Many major stock and bond indices developed by index providers like MSCI and FTSE include malign People's Republic of China (PRC) companies, listed on the Department of Commerce Entity List and/or the Department of Defense List of Communist Chinese military companies," it added.

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US prohibits CCMC shares exchange

In a statement on December 28, US Secretary of State Mike Pompeo said that the Treasure Department has prohibited “the ownership of any (CCMC) Communist Chinese military companies shares by exchange-traded funds (ETFs) and index funds, as well as any of their 50 per cent or greater majority-owned subsidiaries that have been publicly listed by the Treasury or Defense Departments.

“This ensures U.S. capital does not contribute to the development and modernization of the People’s Republic of China’s (PRC) military, intelligence, and security services,” it further added.

This came after US President Donald Trump in November had signed an Executive Order “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies” which prohibits any transaction in publicly traded securities of any CCP company from January 11. In the statement, Trump had also said, the US finds China “is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses.”

(with inputs from ANI)

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