US President Joe Biden signed an executive order this Wednesday (9) that will ban certain US investments in sensitive technology in China and require notification to the government of funding in other sectors.
The long-awaited order authorizes the US Treasury to ban or restrict certain US investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum computing and some artificial intelligence systems.
Biden said in a letter to Congress that he was declaring a national emergency to deal with the threat of advances by countries like China “in sensitive technologies and products critical to military, intelligence, surveillance and cyber capabilities.”
The move could stoke tensions between the world’s two largest economies, although US officials insist the bans are intended to address the “most acute” risks to national security and not separate the two countries’ highly interdependent economies.
Senate Democratic Leader Chuck Schumer praised Biden’s order, saying “For too long, American money has helped fuel Chinese military growth. Today, the United States is taking a strategic first step to ensure that American investment is American government does not finance the Chinese military advance”. He said Congress needs to refine the restrictions and enshrine them into law.
The order seeks to prevent American capital and expertise from helping to develop technologies that could support China’s military modernization and threaten US national security. The focus should be on active investments like private equity, venture capital and joint venture investments.
Most investments covered by the decree will require the government to be notified about them. Some transactions will be prohibited. Treasury said it anticipates an exception for “certain transactions, potentially including those in publicly traded instruments and intra-company transfers from US companies to subsidiaries.”
A spokesman for the Chinese embassy in Washington did not initially respond to a request for comment on Wednesday, but the embassy had said on Friday that the US “customarily politicizes technology and trade issues and uses them as tools and weapons. in the name of national security”.
The rules will only affect future investments, not current ones, a government official told Reuters.
EU Commission to assess measure
The European Commission will look into a US ban on new US investment in China in sensitive technologies such as computer chips, and is in close contact with the US government, the EU’s executive said on Thursday. ).
“We take note of the decree on overseas investment released by the US on Aug. 9. We will review the decree carefully,” a commission spokesman said in an email.
“We are in close contact with the US government and look forward to continued cooperation on this topic.”
A spokesman for the German Economy Ministry was aware of the commission’s move to assess the ban and told Reuters: “We will be actively involved in this process.”
Still reeling from the collapse of its economic ties with Russia, Berlin urged a de-risking approach to China and began looking at measures to deal with risky foreign investment.
David Shepardson, Andrea Shalal, Karen Freifeld and Idrees Ali