US president Donald Trump signed an order Thursday that will ban Americans from investing in Chinese firms that could help Beijing's military and security apparatus.
The executive order said the Chinese government obliges private firms to support these activities and through capital markets "exploits United States investors to finance the development and modernization of its military."
The ban takes effect 11 January, just days before Trump's presidency ends, and is the latest move in increasingly tense US relations with the Asian power.
Investors have until 11 November 2021 to divest any holdings in the banned companies, according to the order.
Trump's declaration said American investors are helping China "to directly threaten the United States homeland and United States forces overseas, including by developing and deploying weapons of mass destruction, advanced conventional weapons, and malicious cyber-enabled actions against the United States and its people."
A statement from National Security Advisor Robert O'Brien said the order will prevent Americans from inadvertently supporting Chinese military actions.
"The President's action serves to protect American investors from unintentionally providing capital that goes to enhancing the capabilities of the People's Liberation Army and People's Republic of China intelligence services, which routinely target American citizens and businesses through cyber operations, and directly threaten the critical infrastructure, economy, and military of America and its allies and partners around the world," the statement said.
The prohibition targets 31 companies, including telecoms, aerospace and construction firms, according to press reports.