UK Considers following US’ investment move against China

The UK is contemplating the possibility of adopting measures akin to President Joe Biden’s recent action aimed at limiting US investment in certain advanced technology companies in China. As Western nations navigate the delicate balance between safeguarding national security and sustaining essential economic ties with China, this move reflects the ongoing challenge of formulating an effective approach.

President Biden signed an executive order to regulate US investment in Chinese companies involved in semiconductor, quantum computing, and artificial intelligence sectors. The order addresses concerns that knowledge-sharing through joint ventures and financial arrangements involving American entities in China is contributing to the advancement of these critical technologies within the country.

Following Biden’s announcement, the British government issued a statement acknowledging the significance of the US approach. A spokesperson for Prime Minister Rishi Sunak’s government remarked that the UK would closely evaluate these new measures in the context of assessing potential national security risks linked to specific investments.

The UK, along with other European nations, is grappling with how best to respond to evolving dynamics between the US and China. President Biden encountered competing pressures from different factions, with advocates of stricter action on China facing off against those, including the Treasury Department, favouring more cautious and gradual measures. The final wording of the executive order suggested a more restrained approach had prevailed.

This approach seems aligned with Sunak’s stance, which seeks to foster trade-friendly relationships with China while safeguarding national security. While it remains unclear whether Sunak will implement a similar measure to the US, the official Atlantic Declaration signed by the UK and the US in June emphasises their intent to address potential security risks stemming from investments and knowledge-sharing.

The UK will thoroughly analyse the executive order and engage with British companies and stakeholders before determining its course of action.

Sunak’s nuanced approach to China has sparked a political balancing act. While he strives for a more measured stance, he faces pressure from within his political party for a more assertive position. A recent report from the UK Parliament’s Intelligence and Security Committee underscored concerns about addressing China’s economic dominance and intelligence activities.

Additionally, HSBC’s criticism of US pressure on the UK to curtail business dealings with China drew scrutiny from British lawmakers. This further highlights the complexities and sensitivities associated with UK-China relations.

China expressed its disappointment with the US decision and pledged to safeguard its interests in response to the restrictions.

The European Commission also announced its intention to closely examine President Biden’s executive order. The EU seeks to maintain cooperation with the US on this matter.

Certain European nations, such as Italy, have already begun taking steps to protect their technological interests. Italy’s cabinet recently approved granting the government special “golden share” powers to prevent technology transfers abroad in strategic sectors including artificial intelligence, semiconductor production, cybersecurity, aerospace, and energy. While not explicitly mentioning China, this move aligns with the EU’s European Security Strategy, which aims to deter interactions with certain countries in specific sectors.

As nations grapple with the intricate interplay between technology, security, and international relations, the challenge of finding common ground persists.