Biden Plans to Limit US Investments in Chinese Tech to Protect National Security
The Biden administration is planning to introduce new rules to curb US investments in critical Chinese technology industries. These industries include semiconductors, quantum computers, and artificial intelligence systems, which are essential for modernizing China’s military.
The proposed rules from the Treasury Department would prohibit certain US investments in Chinese companies developing these technologies. The aim is to prevent American financing from aiding China in creating advanced technology that could be used for weapons tracking, government intelligence, and surveillance.
Paul Rosen, the Treasury Department’s assistant secretary for investment security, stated, “This proposed rule advances our national security by preventing the many benefits certain U.S. investments provide — beyond just capital — from supporting the development of sensitive technologies in countries that may use them to threaten our national security.”
President Biden had earlier signed an executive order calling for the investment ban, which will mainly affect venture capital and private equity firms dealing with Chinese companies. Investors will be required to notify the Treasury Department about specific transactions, and some types of investments will be explicitly prohibited. The Treasury Department will have the authority to enforce divestments, and violations could lead to criminal prosecution by the Justice Department.
In May, President Biden directed his Trade Representative to increase tariffs on $18 billion worth of imports from China, including semiconductors, solar cells, batteries, and critical minerals. This decision aims to protect American workers and businesses from China’s unfair trade practices.
The White House stated, “China’s unfair trade practices concerning technology transfer, intellectual property, and innovation are threatening American businesses and workers. China is also flooding global markets with artificially low-priced exports.”
The statement added that China’s forced technology transfers and intellectual property theft have allowed it to dominate global production of critical inputs necessary for technologies, infrastructure, energy, and healthcare, posing risks to America’s supply chains and economic security.
