President Joe Biden signed an executive order limiting US investment in some Chinese firms, part of a push to restrict the country’s ability to develop next-generation military and surveillance technologies that might threaten US national security.
(Bloomberg) — President Joe Biden signed an executive order limiting US investment in some Chinese firms, part of a push to restrict the country’s ability to develop next-generation military and surveillance technologies that might threaten US national security.
The order, announced Wednesday, would regulate US investments in some Chinese semiconductor, quantum computing and artificial intelligence firms. It was signed after almost two years of deliberations in which China hawks argued for faster and more stringent action while others, including the Treasury Department, pushed for narrower measures that would take longer to go into effect.
Biden administration officials said the order targets Americans who look to acquire equity interests in restricted Chinese companies via mergers, private equity and private capital, as well as by joint ventures and financing arrangements. It doesn’t cover passive investments, and Treasury is weighing exemptions for US investments in publicly traded securities, index funds and others. Companies will have 45 days to comment on the proposal.
The US already restricts exports of some sensitive technologies to China, and the order “would prevent U.S. investments from helping accelerate the indigenization of these technologies” in the country, it said.
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The restrictions are the latest in a series of US actions that has complicated the Biden administration’s fraught relations with China, including export controls on semiconductor technology announced last year and efforts by Congress to push the White House toward taking a harder line, including on defending Taiwan.
China’s embassy in Washington didn’t immediately respond to a request for comment.
The rollout showcases how cautious the White House is about ratcheting up tensions with China. Instead of announcing it in the presence of media and giving public remarks on the matter — as is often the case for executive orders — Biden opted to sign it while out of town and without cameras. The president was traveling in New Mexico to promote his “Bidenomics” agenda and didn’t address the order.
The US remains committed to an open investment environment and is targeting only a very small sub-sector of capital and know-how, senior administration officials told reporters in a call previewing the order. The officials said the action was taken for national security reasons and not to compete with China.
Read more: China to Respond If the US Puts Limits on Investment, Envoy Says
Biden in May predicted a “thaw” was coming in US-China relations, which over the past year have deteriorated to their worst in decades. The president also said repeatedly that he plans to speak to and meet with his Chinese counterpart, President Xi Jinping, in the near future. The two leaders are expected to meet in November when Biden hosts the APEC summit in San Francisco, but neither side has confirmed the plans.
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