United States President Joe Biden has signed an executive order that seeks to prevent certain American investments in China, especially in sensitive technology, and requires prior government approval for funding in other tech sectors.
The long-awaited move, which could further strain bilateral ties, directs the US Treasury secretary to narrow down investments in quantum computing, artificial intelligence and advanced semiconductors.
In a letter to Congress on Wednesday (Aug 9), Biden said he was declaring a national emergency to deal with the threat of advancement by countries like China “in sensitive technologies and products critical to the military, intelligence, surveillance, or cyber-enabled capabilities.”
Strides by China in these areas constitute “an unusual and extraordinary threat to the national security of the United States” and certain US investments “risk exacerbating this threat,” the order said, according to Reuters news agency.
Crippling China’s semiconductor industry
The order seeks to tighten screws on China’s semiconductor industry, which is heavily reliant on foreign-made equipment to design chips and tools to manufacture them.
Beijing has been working to cultivate its nascent domestic industry and has been investing a lot to build solid fabrication plants, known as fabs—a field dominated by US, Japan and the Netherlands.
The Biden administration argues that these prohibitions were intended to address “the most acute” national security risks and not to separate the two countries’ highly interdependent economies.
Meanwhile, the move has drawn mixed reactions, with the Democratic party hailing the decision, and the Republicans saying that the prohibitions should have included other areas.
Democrats hail, Republicans say more need to be done
Senate Democratic Leader Chuck Schumer said, “For too long, American money has helped fuel the Chinese military’s rise. Today, the United States is taking a strategic first step to ensure American investment does not go to fund Chinese military advancement.”
He said that Congress must enshrine restrictions in law and refine them.
Republicans said the Biden order did not go far enough.
House Foreign Affairs Committee Chairman Michael McCaul praised the move to restrict new outbound investments in China but said “the failure to include existing technology investments as well as sectors like biotechnology and energy is concerning.”
The restrictions will only affect future investments, not existing ones, an administration official told Reuters.
A senior US official, who is close to the development, said that the order would be implemented next year after multiple rounds of public comment, including an initial 45-day comment period.
(With inputs from agencies)
