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Biden Signs China Tech Investment Ban Amid National Security Fears

Updated: Jan 8

[Edited] President Joe Biden has signed an executive order that will prohibit new US investment in China in sensitive technologies such as computer chips.

President Joe Biden
Credits: NYTIMES

The order also requires government notification in other tech sectors. The aim is to prevent American capital and expertise from aiding China's military modernization and undermining US national security.

The order targets private equity, venture capital, joint ventures, and greenfield investments. China has expressed grave concern about the order and reserves the right to take measures. The move could fuel tensions between the two largest economies in the world.

The long-awaited executive order authorizes the US Treasury secretary to restrict or prohibit US investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies, and certain artificial intelligence systems. The specific details of the restrictions have not been provided, but the proposal is open for public input.

President Biden declared a national emergency in a letter to Congress, stating the need to address the threat of technological advancement by countries like China in sensitive areas critical to military, intelligence, surveillance, and cyber-enabled capabilities.

China has expressed strong dissatisfaction with the order, stating that it undermines the international economic and trade order and damages the economic and commercial interests of American companies. The Chinese government has urged the US to fulfill Biden's promise of not decoupling from China or obstructing its economic development.

The order will impact the normal operation and decision-making of enterprises and create more uncertainty for global economic growth. The Chinese tech industry has already seen a decline in US investment due to geopolitical tensions.

The proposal focuses on investments in Chinese companies involved in software development for computer chips and tools for their manufacturing. The US, Japan, and the Netherlands currently dominate these fields, and China has been working on developing its own alternatives.

The order will only affect future investments and not existing ones. The Treasury may request disclosure of prior transactions. Some exemptions are expected, including potentially publicly traded instruments and intracompany transfers from US parents to subsidiaries.

Republican Senator Marco Rubio criticized the plan, stating that it is riddled with loopholes and fails to include industries deemed critical by the Chinese government.

The order is expected to be implemented next year after multiple rounds of public comment. It remains to be seen how it will affect US allies and how China will respond.

  • President Biden signs executive order banning certain US tech investments in China

  • Aim is to prevent American capital and expertise from aiding China's military modernization

  • China expresses grave concern and reserves the right to take measures

  • Order will impact normal operation of enterprises and create uncertainty for global economic growth


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