An executive order signed by President Joe Biden forbids US companies from making new investments in China in sensitive technologies like computer chips and mandates government notification in other such industries.
In three industries—semiconductors and microelectronics, quantum information technology, and specific artificial intelligence systems—the directive gives the US Treasury secretary the authority to forbid or limit US investments in Chinese businesses.
US technology ventures
The limitations will only apply to “selected subsets” of the three categories, but no details were provided. The plan, which is available for public comment, seeks to stop American resources from assisting China in the development of technology that could enable its military modernization and jeopardize US national security.
Private equity, venture capital, joint ventures, and greenfield investments are the targets of the measure. Concerned by the decision, China has stated that it reserves the right to take action.
- Biden orders US companies to avoid investments in sensitive technologies.
- Limitations on US technology aid to China, threatening national security.
- Republicans argue decree is weak, with loopholes, and investor disclosure requirements.
The US should follow the rules of the market economy and the idea of fair competition, according to the Chinese Ministry of Commerce, and should avoid intentionally impeding international trade and economic cooperation.
The idea focuses on making investments in Chinese businesses that are creating equipment and software for manufacturing computer chips. In those fields, the US, Japan, and the Netherlands have sway, but the Chinese government has been attempting to develop domestic alternatives.
According to the White House, Biden talked to allies about the idea and took the Group of Seven nations’ suggestions into consideration. The two biggest economies in the world may become more tense as a result of the action.
Republicans claimed that the decree was weak and full of loopholes. Some transactions will be prohibited by the decree, while others will require investors to inform the government of their plans.
The Semiconductor Industry Association anticipates that the ruling will give US chip companies access to important international markets, particularly China, and promote fair competition.
