1

Can the United States force multinational companies from not owning Chinese assets?

The White House is discussing ways to restrict US capital flows into China in what would be an unprecedented move that could limit trillions of dollars in investment and accelerate a financial decoupling of the two largest economies in the world.

https://www.scmp.com/news/china/article/3030739/donald-trumps-administration-weighing-limits-us-portfolio-flows-china

There was some deliberation not too long ago on how to restrict U.S. capital flows into China. Restricting capital flows is one thing, but can they force U.S. companies to sell assets they currently own? I am asking, because a U.S. company could just transfer the asset to another subsidiary outside the U.S. even if the U.S. put some limits to Chinese assets ownership. And can the U.S. outright forces them to sell the assets without allowing them to sell it, which assumes they won't allow a company to sell the stocks to another subsidiary, which seems to be beyond the scope of the Presidential powers.

  • I didn't understand if you meant if "White House" can [which was the term in the quoted text you included] or if "US" can. If the former, No [unless getting support from outside of WH, as [sorry for adding some European flavor into this] I believe that still, not only the right to carry gun, but also the right for one's property is a constitutional right [As I guess still is also the apparently de facto diminishing freedom of expression]. In the end of the day [game], it is anyway power game, so If you asked what US can do, I guess sky used to be the limit until the Space Forces came in... – Tuomo Sep 28 '19 at 13:29
  • To add: I took the question as "can X DIRECTLY force..." indirecetly, of course, while it is difficult to "disfavor certain comanies", it is theoretically easier to "favor" the others, i.e. I think that even only with the PONTUS power, it is possible to do even company-specific influencing [I mean even more direct one than just "Tweeting down the Amazon share price (ca 1 year ago?)" – Tuomo Sep 28 '19 at 13:34
  • Very related: politics.stackexchange.com/questions/46039/… – Fizz Sep 28 '19 at 13:34
  • This is really a question for the Law site. My opinion (but I am not a lawyer) is that it would be illegal under the 5th Amendment's takings clause: "...nor shall any person... be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." So the government could perhaps seize Chinese assets held by Americans, but it'd have to pay fair market value for them. – jamesqf Sep 29 '19 at 4:04
2

They probably can (try). Look how the Iran sanctions are implemented.

all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the entities designated today may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates a significant financial transaction or provides significant financial services for entities designated in connection with Iran’s support for international terrorism or any Iranian person on OFAC’s List of Specially Designated Nationals and Blocked Persons could be subject to U.S. correspondent account or payable-through account sanctions.

So the sanctions work on (the threat of a) transitive basis/punishment. If X does anything financial with respect to Y (who is already on the blacklist), X itself can become blacklisted.

Of course, it would be an extreme measure to do that for an entire country. I don't want to comment how [im]practical it would be or how easily evaded.

Frankly, it seems a lot more probable that this is largely used a signaling method, to cause at least some US investors to dump China-related assets, in the hope of causing a stock market rout in China itself. Trump relishes tweeting bad news about the Chinese economy.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .