By Susan Heavey and Alexandra Alper

WASHINGTON (Reuters) – The United States on Wednesday updated its ban on investments in certain Chinese military companies by delaying until May the application of the directive’s restrictions on companies with names similar to those that have been blacklisted.

In a statement posted on the U.S. Treasury Department website, the Biden administration said most investments in companies “whose name closely matches, but does not exactly match, the name of a Communist Chinese military company” would be allowed until May 27, extending the deadline which was originally set to Jan. 28.

The order does not authorize securities transactions with subsidiaries of banned Chinese military companies, it added.

In November, former U.S. President Donald Trump’s administration moved to prohibit U.S. investments in Chinese companies that Washington said were owned or controlled by the Chinese military in an effort to ramp up pressure on Beijing.

The order required U.S. investors to completely divest their holdings in the firms by Nov. 11, 2021 and was seen as part of a bid by Trump to cement his tough-on-China legacy.

The blacklist of alleged Chinese military companies was mandated by a 1999 law but the Defense Department only began complying by publishing names of the firms last year. The catalogue now includes 44 companies including China’s top chipmaker SMIC and oil giant CNOOC.

Questions have swirled as to how the Biden administration will handle the tough new sanctioning tool but it has so far declined to provide any insight.

Beijing has said the United States lacks evidence and described the ban as wanton oppression of its companies.

(Reporting by Susan Heavey and Alexandra Alper; Editing by Lisa Lambert, Catherine Evans and Andrea Ricci)