White House plans to restrict US investments in China

White House plans to restrict US investments in China

White House Plans to Restrict U.S. Investments in Chinese Technology

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The White House is preparing to unveil its plans to restrict certain U.S. investments in sensitive technology in China while requiring the government to be notified of other investments. The aim of these plans is to prevent American capital and expertise from aiding China’s military advancements and posing a threat to U.S. national security.

Sources reveal that President Joe Biden is expected to issue an executive order outline these measures, which will provide a screening process for outbound investments to China. Although the White House has yet to comment on this, the senior government source suggests that the order will be announced soon.

It is important to note that the Biden administration has consistently emphasized that any restrictions on U.S. investment in China will be specifically targeted, rather than a broad-based technology blockade. National Security Adviser Jake Sullivan affirmed this in April, stating that these measures will be tailored to address specific concerns, contrary to Beijing’s claims.

Commerce Secretary Gina Raimondo echoed this sentiment in March, emphasizing that the administration does not want to impose overly broad measures as they can negatively impact American workers and the economy. The intention is to strike a balance that protects U.S. national security interests without compromising economic growth.

The focus of these restrictions is expected to be on active investments in semiconductors, quantum computing, and artificial intelligence, with particular scrutiny on U.S. private equity, venture capital, and joint venture investments in China. Most investments falling within the scope of the order will require government notification, while some may even be prohibited.

According to The New York Times, the Biden administration intends to expand reporting requirements for investments in a wider range of Chinese industries. This move will provide the U.S. government with greater visibility into financial transactions between the United States and China.

In terms of semiconductors, the restrictions are likely to align with the export control rules for China issued by the U.S. Department of Commerce in October. This will ensure consistency in addressing national security concerns related to sensitive technologies.

Emily Benson, Director of the Center for Strategic and International Studies’ project on trade and technology, believes that investments in artificial intelligence will face stringent regulations if they are intended for military purposes. However, other investments in the AI sector may only require notification to the government. Determining what falls into the military category will be a crucial task for the administration.

It is important to note that the implementation of these restrictions will not be immediate. The executive order is expected to direct the publication of a notice of proposed rule-making, providing an opportunity for industry feedback and evaluation. This approach allows for a careful consideration of potential impacts and ensures a more comprehensive and effective strategy.

In conclusion, the White House is set to release its plans to restrict U.S. investments in sensitive technology in China. The objectives are to safeguard U.S. national security interests and prevent the unintended support of China’s military modernization efforts. By narrowing the focus and adopting a targeted approach, the Biden administration aims to strike the right balance between security concerns and economic growth. As these plans take shape, the government will seek industry feedback and evaluate the potential implications before finalizing the regulations.