Editor's note: Bradley Blankenship is a Prague-based American journalist, political analyst and freelance reporter. The article reflects the author's opinions and not necessarily the views of CGTN.

An executive order issued by U.S. President Joe Biden came into effect on August 2 that essentially blacklists 59 Chinese companies that are deemed a national security threat for having ties to the Chinese military, though no serious evidence has been presented to prove this is the case.

The official read-out of the order is filled with the same political platitudes about "human rights" and "democracy," which is never seriously qualified and only meant to reinforce the U.S. ongoing provocations against China. It shows that the U.S. is in an erratic state, unable to compete with China in good faith and instead resorting to the same familiar smear tactics.

Importantly, however, this order is basically an enhancement of an existing executive order imposed by the administration of former President Donald Trump, showing that both major political parties in the U.S. have embraced protectionist policies that will only hinder bilateral relations – and will undoubtedly backfire against the U.S.

That's because attacking successful foreign companies based on scant evidence will only make the U.S. even less of an attractive destination for foreign investors.

Former Treasury Secretary Hank Paulson made the point in an op-ed for the Wall Street Journal published on December 9, 2020, a day before the S&P Dow Jones Indices removed some Chinese companies from its index products following the Trump executive order, that U.S. financial leadership "is increasingly being challenged by fierce competition from abroad and by shortsighted and counterproductive policies at home."

This is certainly true, and it comes at a time when the U.S. is already falling behind on some of its prior competitive advantages. For example, one of the things that make the U.S. financial market so attractive is the fact that capital flows so freely in the country. It's possible to buy assets from seemingly any class and any part of the world just in the U.S., plus foreign companies had tended to operate quite freely within the country.

Now this major advantage is being self-sabotaged. Paulson specifically attacked the Trump's administration attack on Chinese companies, noting that it could hurt demand for the U.S. dollars if Chinese investors are shooed away by provocative U.S. policies (All this when the U.S. has been padding its economy with mountains of debt).

At the same time, another good point that he mentioned was the fact that U.S. investors – not just ultra-wealthy investors, but also average people's pension funds – will be shut out from China's massive growth potential. For example, last year the Shanghai index dominated global exchanges for the number of IPOs and capital raised. Other major indexes, such as the Shenzhen component and CSI 300 saw growth close to 30 and 40 percent, respectively, in 2020. Losing access to this market would be a devastating handicap for would-be U.S. investors.

To be sure, this is not an abstract idea since foreign investment in the U.S. has been declining since the 2008 financial crash and fell off a steep cliff in 2020. The general trend has to do with the fact that the deregulated U.S. financial market is prone to things like fraud, but the huge dip last year is mainly explained by the government's mismanagement of the COVID-19 situation.

Meanwhile, China was the largest recipient of foreign direct investment in 2020. In that year, China saw $163 billion in investment, compared to $134 billion that went to the United States. In 2019, the U.S. had received $251 billion while China received $140 billion – which could not be a more stark contrast in showing how foreign investors perceive the direction of the countries.

With all of these factors already at play, attacking competitive foreign companies, exactly how the U.S. government is dealing with Chinese companies, is the last thing the White House should be doing if it wants the U.S. to maintain its role as an important global financial center.

Of course, it's been clear this whole time that Biden was never going to repeal the Trump executive order since the political landscape is now so toxic. Any return to the status quo at this point would be seen as "weak" and Biden's political opponents would undoubtedly launch McCarthyite attacks against him and his Democrat colleagues in forthcoming elections.

This dynamic and the corrosion it underscores within the whole U.S. political system will probably be another factor to consider for foreign investors weighing the U.S. in the future.

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