The New York Stock Exchange said Wednesday it will delist several Chinese telecommunications firms that allegedly worked with the Chinese military.
The stock exchange had first said last week it would remove China Telecom, China Unicom and China Mobile in order to comply with a Trump administration executive order. The NYSE then tried to reverse course, causing confusion on Wall Street, only to ultimately remove the companies from its exchange, after all.
The effect is to bar the companies from trading on the exchange.
The movement comes in the wake of an executive order, issued in November, that aims to block Chinese companies from using U.S. capital to help advance Chinese military and intelligence goals.
The decision on Wednesday to delist the firms came after the Treasury Department‘s Office of Foreign Assets Control issued guidance Tuesday that would block people in the U.S. from conducting transactions with the firms, according to a NYSE release. Treasury Secretary Steven Mnuchin also phoned NYSE President Stacey Cunningham to express his disapproval of the exchange’s effort to allow the Chinese firms to continue trading, according to Bloomberg.
The NYSE initially tried to backpedal on Monday after “further consultation with relevant regulatory authorities.” The exchange at the time said it would not delist the firms, causing widespread confusion.
The original executive order claims that Chinese firms with access to U.S. investments allows Beijing “to directly threaten the United States homeland and United States forces overseas, including by developing and deploying … malicious cyber-enabled actions against the United States and its people.”
The order targets 31 companies overall that the Pentagon has said are Communist Chinese military companies. The order and the guidance go into effect Jan. 11.
Chinese telecommunications companies have faced scrutiny in the U.S. for months over national security concerns. The Federal Communications Commission began the process of revoking China Telecom’s authorization to operate in the U.S. last month over concerns that the company would be required to comply with Chinese government requests for information. In addition to China Telecom, the FCC warned last year it may work to hinder the operations of Pacific Networks Corp and ComNet over national security concerns.
The FCC already blocked China Mobile, one of the firms the NYSE says it will delist, from providing international services in the U.S. in 2019.
The Trump administration this week announced an executive order that seeks to ban U.S. transactions with eight applications, including Alipay, WeChat Pay and Tencent QQ, over concerns Americans’ sensitive information used in the applications could be shared with the Chinese government.
The NYSE’s move should signal that there is strong interest in the U.S. in curtailing investment in companies that support malign Chinese military activity, Sen. Marco Rubio, R-Fla., said in a statement.
“After an intense pressure campaign from those of us who believe we should prioritize the interests of American workers and mom and pop investors above Beijing and Wall Street, I am pleased that the NYSE decided to reverse their earlier announcement and take the correct action: delisting China’s telecom companies,” Rubio said. “I hope that this embarrassing incident makes clear that there is a strong, bipartisan consensus that the United States will not allow China’s exploitation of U.S. capital markets, or Wall Street’s role as facilitator, to continue unimpeded.”
Sens. Chuck Schumer D-NY, and Tom Cotton, R-Ark, also have signaled interest in curtailing Chinese telecommunications firms’ operations in the U.S. The bipartisan Senate Permanent Subcommittee on Investigations, chaired by chaired by Sens. Rob Portman, R-Ohio, and Tom Carper, D-Del., warned last year that the U.S. government needed to step up its telecommunications review process to better check risks posed by Chinese state-owned companies.