Biden signs order curbing investment in Chinese tech

President Joe Biden has issued an executive order aimed at restricting specific US investments in sensitive technology in China. The order also mandates government notification for funding in other technology sectors.

Biden’s declaration of a national emergency underscores concerns about the advancement of countries such as China in areas crucial to military, intelligence, surveillance, and cyber capabilities.

The executive order empowers the US Treasury Secretary to prohibit or restrict specific American investments in Chinese entities operating within three sectors: semiconductors and microelectronics, quantum information technologies, and certain artificial intelligence systems.

Senior administration officials clarified that the directive is rooted in national security considerations rather than economic interests. The order is designed to impede China’s potential to leverage US investments in its technology sector to enhance its military capabilities. It aims to balance this with the preservation of broader trade ties that are essential for both nations’ economies.

While the US and China maintain a deep trade relationship as the world’s two largest economies, they are increasingly entangled in geopolitical competition. The Biden administration seeks to address security risks while maintaining economic interdependence.

Notably, the regulations will impact future investments rather than existing ones. The order is set to be implemented next year after multiple rounds of public comment.

The directive emphasises engagement with US allies and partners, aligning with discussions held within the Group of Seven (G7) countries.

The restrictions will apply to private equity, venture capital, joint ventures, and greenfield investments. Most transactions affected by the order will necessitate government notification, while some will be prohibited.

The new limits have raised concerns in the Chinese embassy in Washington, which warned of potential consequences for Chinese and American businesses and investors. China vowed to safeguard its rights in response.

The move is expected to fuel debate about technology and trade dynamics between the two nations.

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