Biden Administration Imposes Investment Limits on Chinese Tech Sectors
The Biden administration will attempt to delay the development of next-generation technologies with potential military applications, such as advanced semiconductors, artificial intelligence, and quantum computing, by limiting the ability of U.S. corporations to invest in these sectors in China.
In an executive order that is anticipated to be published on Wednesday, American companies will be subject to unprecedented new federal oversight that will scrutinize and potentially prevent some of their investments in China’s technology sector. The objective is to prevent U.S. funds from supporting China’s military modernization, which could pose a threat to the United States.
The rules would not take effect for at least a year, and there will be a period for public comment before the rules are ratified, allowing businesses and other organizations to provide input.
White House, Treasury, and Commerce Department representatives were not immediately available for comment.
Initial administration plans to restrict U.S. investment were more comprehensive. After months of consultation with the private sector, however, the scope of the new regulations was narrowed.
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Capital Flow Concerns: Impact on U.S. Businesses and Economy in China Clampdown
Some American executives were concerned that a restriction on the flow of U.S. capital to China could be detrimental to U.S. businesses and have a negative effect on the domestic economy. The Chinese economy, which is the second largest in the world and has more than one billion consumers, is a crucial market for many American businesses.
Secretary of State Antony Blinken and Treasury Secretary Janet Yellen made separate journeys to Beijing earlier this summer to help alleviate tensions between the United States and China. During her meetings with Chinese counterparts, Yellen sought to assure them that the executive order would be “highly targeted.”
During a press conference in Beijing in July, Yellen stated, “I want to allay their fears that we would do something that would have broad based impacts on the Chinese economy.” “That’s not the case. That’s not the intention.”
China’s ambassador to the United States, Xie Feng, has nonetheless warned that Beijing will respond.
“The Chinese government cannot simply sit idly by,” Xie stated in July at the Aspen Security Forum. “There’s a Chinese saying: ‘We will not make provocations, but we will not flinch from provocations.’ So China definitely will make our response.”
China and the United States are becoming increasingly engaged in a technological arms competition. In October of 2016, the Department of Commerce announced new restrictions on the export to China of advanced technology required for the production of high-end semiconductors. The action was intended to impede China’s ability to develop its own manufacturing capabilities and to delay the development of supercomputers and certain weapons, including hypersonic missiles.
In a June interview with “Face the Nation” moderator Margaret Brennan, Blinken stated that the administration intended to construct a “very high fence around a very small piece of land.” He added, “That small piece of land has very sensitive technology that could be used against us. We’re not going to let that happen.”
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Source: CBS News
