Trump bars US investment in three Chinese refiners

China's state-controlled refiners Sinochem, ChemChina and Norinco will be off limits to US investors under the terms of an executive order US president Donald Trump signed today.

The three refiners appear on a list of 31 energy, infrastructure and technology companies with alleged ties to the Chinese military that the Pentagon compiled earlier this year. The executive order sets a deadline of 11 January for ending any transaction in publicly traded securities or derivatives issued by the 31 Chinese companies or any funds that trade in them.

The Pentagon compiled its list in compliance with a 1998 US law, which was previously not enforced, requiring it to name companies associated with the Chinese military that operate directly or indirectly in the US. The same law — the defense authorization bill for fiscal year 1999 — authorized, but did not mandate, the administration to impose sanctions on the companies "in the case of their commercial activity in the US."

Trump's order is part of a broader attempt by his administration to decouple the two countries' economies by imposing business and investment restrictions on leading Chinese companies, especially state-owned and controlled enterprises.

It also fits a pattern of seeking to ensure that Trump's policies outlast his term, despite his defeat in the 3 November presidential election.

President-elect Joe Biden has promised a tough policy toward China, but his team is likely to discard the Trump administration's recent announcement that the US will no longer pursue a policy of engagement with Beijing. "We should put less focus on trying to slow China and do more to move faster ourselves," former undersecretary of defense Michele Flournoy said earlier this year. Flournoy is a potential candidate for the position of defense secretary in a Biden administration.

In addition to operating the 240,000 b/d Quanzhou refinery in China, Sinochem owns a 40pc stake in US independent producer Pioneer Natural Resources' Wolfcamp shale development in Texas. ChemChina operates three refineries in Shandong, China — Huaxing, Zhenghe and Changyi with a combined 300,000 b/d of capacity. Norinco runs the 120,000 b/d Huajin refinery and is a major crude trader via its Zhenhua subsidiary.

By Haik Gugarats