Citing national security reasons, the White House, via executive order, banned U.S. investors from owning or trading in any securities that originate from 31 Chinese firms that it believes are connected to the Chinese military. This includes not only direct sales of securities but even derivatives of those securities, or the securities of a subsidiary. 

The order applies to what the White House has classified "Communist Chinese military companies," a category that, since 1999, has been generally up to the Department of Defense with consultation from the Treasury Department. The list of companies so banned (contained on two lists) include telecom giant Huawei, cloud computing firm Inspur, chemical conglomerate Sinochem, and many others.

The New York Times said that the order is in reaction to Chinese leadership increasingly drawing on both private and state-owned companies to support military and intelligence activities, which has made the White House wary of U.S. capital being used to support a rival. It is the latest in a series of moves to decouple the Chinese and U.S. financial systems. In August, the White House declared that all Chinese companies on U.S. exchanges must get PCAOB-compliant audits or else be delisted come 2022. The administration also prevented a federal pension plan from investing in Chinese securities a few months earlier.

The order will become effective at 9:30 a.m. Eastern Standard Time on Jan.11, 2021, or nine days before Inauguration Day. Investors will have until Nov. 11, 2021, to completely divest.