President Biden issues order restricting technology investments in China
- By Aniket Gupta, On 9 August 2023, US President Joe Biden signed an executive order that enforces restrictions on certain new American investments in China, specifically targeting sensitive technologies such as computer chips. The order also mandates government notification for investments in other technology sectors in China.
- The eagerly anticipated directive grants authority to the US Treasury Secretary to forbid or limit American investments in Chinese enterprises in three key sectors: semiconductors and microelectronics, quantum information technologies, and specific artificial intelligence systems. The order stated that the constraints would be applicable to ‘narrow subsets’ of the three domains, but exact details were not disclosed.
- The presidential order aims to prevent the utilization of American capital and knowledge to advance China's military modernization efforts and pose a threat to America’s national security. It seeks to reduce the involvement of private equity, venture capital, joint ventures, and new business ventures in China.
- The next day, the Chinese government expressed profound concern about the order and declared its right to undertake appropriate actions in response. The ministry said the US should uphold the principles of market economy regulations and fair competition and not artificially impede international economic and trade interactions and collaboration or introduce barriers.
- The proposal centers on investments in Chinese enterprises engaged in the creation of software for computer chip design and the development of manufacturing tools for such chips. The leading countries in this area are the US, Japan, and the Netherlands, while the Chinese government has been actively engaged in developing its own indigenous alternatives.
- According to the White House, that President Biden engaged with US allies over the proposal and took input from G7 nations.
- The executive order will exempt certain transactions and require investors to inform the government about their intentions for other deals. The treasury department indicated it might grant exceptions for specific transactions, which may include publicly traded instruments and transfers between US parent companies and subsidiaries.The order is set to be implemented in 2024 after several rounds of public input, which would include an initial 45-day comment period. Source: https://www.domain-b.com/, Image: https://pixabay.com/
