What happened?
On 3 June, US President Joe Biden signed an executive order sanctioning investments in Chinese companies with alleged ties to defence and surveillance technology firms. In this order, the US government expressed concerns over Chinese technology companies both inside and outside China facilitating "repression or serious human rights abuses" and "unusual and extraordinary threats" - of religious and ethnic minorities. Biden prohibited US investors from investing in 59 Chinese companies, originally 31 in former President Donald Trump's list. 

On 4 June, at a press briefing, China strictly opposed Washington's move and declared the US had 'unscrupulously suppressed' and restricted Chinese companies. The ban will take effect from 2 August 2021, giving investors one year to withdraw. 

What is the background?
First, the case of sanctions against Chinese entities. The trade restrictions were initiated under the Trump administration, wherein the US investors were banned from buying or selling publicly traded securities from those companies. Trump's sanction prohibited the leading smartphone maker, Huawei, and Hikvision, a major manufacturer and supplier of facial-recognition technology, both of which have been retained in the new order. TikTok was initially issued with a set of restrictions after both Democrats and Republicans in Congress claimed that the app posed a national security threat and US federal employees should elude from using it on government-owned devices.

Biden's new executive order includes major Chinese firms that were on the previous executive order list like Huawei, Hangzhou Hikvision Digital Technology, and Semiconductor Manufacturing International Corp (SMIC). SMIC has enhanced China's domestic chip sector. TikTok was eluded from the new list; the Biden administration has not taken any steps to neither accept nor deny that the Chinese government could be hoarding sensitive data of Americans. Xiaomi was also excluded from the list after successfully lobbying against its inclusion on the Trump-era list and dismissing claims that they were tied to the Chinese military as groundless. 

Second, Biden following Trump's China footsteps. Biden's policies have always been reversing Trump's from the day he took over the office. From successfully withdrawing the army in Afghanistan to resuming warm relations with Europe, rejoining the Paris climate agreement, returning to the Iran nuclear deal, eliminating tariffs on European goods, and so on. But Biden seems to be following in the footsteps of Trump when it comes to China. It is the broadest executive order targeting Chinese tech entities after the issue of re-investigating the origins of Covid-19. 

Third, the Chinese resistance. China is the US' largest trading partner, and it is proven that the economies of China and the US are inseparable. Wang Wenbin, the spokesperson for China's Ministry of Foreign Affairs, remarks that this order compromises the legitimate rights and interests of Chinese companies and the interests of global investors, including the US. The US will quickly be losing its resources amid increasingly sour relations between the world's two most powerful countries. 

What does it mean?
First, the new order is one of the most aggressive moves against China that the Biden administration has adopted. It advances many of the tactics used by the Trump administration in its efforts to stay competitive with China. 

Second, this order takes the world a step closer to strategic decoupling with significant implications in the global financial sector. 

Third, political clashes have already soured tensions between the two countries. American financial firms are going to face difficulties while they sort out the ties to these Chinese firms in the coming future.