On Wednesday, the White House under Joe Biden will reveal plans to restrict certain U.S. investments in China’s sensitive technology sectors, according to an insider in the government. Additionally, these plans will necessitate governmental notification for other investments.
These moves aim to halt U.S. capital and knowledge from contributing to technological advancements that might bolster China’s military modernization and pose a risk to American national security.
Last Friday, Reuters said that President Biden’s executive order targeting the screening of U.S-bound investments in China’s sensitive technologies was anticipated this week. The high-ranking government source said the order would likely come on Wednesday, though the White House did not comment on Tuesday.
The Biden administration has consistently emphasized that any investment limitations in China will be very specific.
In April, National Security Adviser Jake Sullivan stated, “These are tailored measures,” and refuted Beijing’s characterizations of them as a ‘technology blockade.’
Similarly, U.S. Commerce Secretary Gina Raimondo mentioned in March that the administration’s goal is not to be “overly broad” since such an approach could negatively affect American workers and the economy.
The planned restrictions will focus on active U.S. investments in China, including private equity, venture capital, and joint venture investments in quantum computing, semiconductors, and artificial intelligence.
Sources say that most of the investments falling under the order will need government notification, and some transactions will be outright banned.
On Tuesday, the New York Times reported that the administration intends to require companies investing in the broader array of Chinese industries to report those activities, granting the U.S. government more insight into financial interactions between the two countries.
According to sources who spoke to Reuters earlier, the expected restrictions on semiconductor investments will align with the export control regulations for China issued by the U.S. Department of Commerce last October.
Center for Strategic & International Studies (CSIS), Emily Benson, expects artificial intelligence investments connected to military applications to be prohibited. In contrast, other investments in the sector may simply need governmental notification.
The onus will be on the administration to classify what AI constitutes a military application, noted Benson, the director of CSIS’s project on trade and technology.
The anticipated order from Biden will likely prompt the proposed rulemaking publication. It’s not expected to become effective immediately, and there will probably be a comment period to consider industry responses before finalization.