The White House is set to unveil restrictions on US investment in sensitive Chinese technology, Reuters reported, in an effort to limit the flow of US capital and know-how to China. The Biden administration has cited national security concerns as a motivating factor behind the executive order, which is expected to be announced today (Aug. 9).
As part of the restrictions, private equity and venture capital firms in the US will be blocked from investing in certain advanced tech industries in China, sources told the New York Times in a report published yesterday (Aug. 8).
US firms invested in a “broader range” of sectors in the Chinese economy will also be required to report on their activity to increase the transparency of financial flows between the two countries, the New York Times also reported. Some investments may also be outright banned, according to Reuters.
The new measures mark a major step to target the financial ties between the US and China, and will likely ramp up tensions between the world’s two largest economies, which have already clashed on fronts including chip technology, tariffs, human rights, and intellectual property.
Chinese industries that may be targeted under the new US investment rules
🤖 Artificial intelligence
🧠 Semiconductors
🖥️ Quantum computing
🧪 Biotechnology
⚡ Clean energy
The Biden administration is framing the measures as part of its “de-risking” strategy towards China
US officials have described the new highly anticipated investment rules as targeted, rather than sweeping. “These are tailored measures. They are not, as Beijing says, a ‘technology blockade,’” said national security adviser Jake Sullivan at the Brookings Institution in April. “They are focused on a narrow slice of technology and a small number of countries intent on challenging us militarily.”
The White House has also said that the measures are designed to have a “greater impact on the Chinese government’s efforts to acquire sensitive capabilities than…on the competitiveness of American companies,” according to a statement to Politico in February.
The framing fits into the Biden administration’s rhetoric about “de-risking” rather than “de-coupling” the US-China relationship — a message that was recently delivered by US treasury secretary Janet Yellen during her trip to Beijing in July.
The phrase, which originated from the European Union’s strategy towards China, sounds less drastic than “de-coupling.” But whether the scope of the “de-risking” strategy is less extreme remains unclear: The term is purposefully ambiguous. The newest White House measures may open a new, potential flashpoint of conflict between the US and China in the realm of globe finance.