U.S. President Joe Biden Signs Executive Order Restricting Investments in China’s Sensitive Technology
WASHINGTON – President Joe Biden signed an executive order on Wednesday that will limit certain U.S. investments in sensitive technology in China and require government notification of funding in other tech sectors. This move comes as tensions between the United States and China continue to rise.
The executive order authorizes the U.S. Treasury secretary to regulate specific U.S. investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies, and certain artificial intelligence systems. The aim is to prevent American capital and expertise from aiding in the development of technology that could support China’s military advancement and pose a threat to U.S. national security.
While the order is expected to fuel tensions between the two largest economies, U.S. officials maintain that its provisions are intended to address increased national security risks rather than separate the interdependent economies. “We’re pursuing a policy of de-risking with respect to the PRC by taking targeted national security actions, not decoupling our economies,” one official stated.
The restrictions outlined in the executive order will primarily affect future investments, rather than existing ones. The government will require notification for most investments captured by the order, and some transactions will be prohibited. However, detailed information on these prohibitions was not immediately available.
The Biden administration has emphasized the narrow targeting of restrictions on U.S. investment in China. The order is expected to be implemented next year, following several rounds of public comment and feedback.
Regulators plan to issue an advanced notice of proposed rulemaking to further define the scope of the program and allow for public commentary before making a formal proposal. The regulations are not expected to cover passive or securities investments.
Regarding specific sectors, investments in semiconductors will likely follow export control rules for China issued by the U.S. Department of Commerce. On the other hand, investments in artificial intelligence may be prohibited only to military users and uses, with other investments in the sector requiring notification to the government.
The burden will be on the administration to determine what falls into the military category when it comes to AI. Quantum computing regulations are still in development, with expectations of certain sensors and other related technologies being prohibited. Potential exemptions related to universities and research are also being considered.
The signing of this executive order signals the Biden administration’s continued efforts to address national security concerns while maintaining economic ties with China. As the regulations take shape, further developments in U.S.-China relations are anticipated.
Reporting by David Shepardson, Andrea Shalal, and Karen Freifeld; additional reporting by Idrees Ali; Editing by Lincoln Feast and Jonathan Oatis