Biden Plans to Limit US Investments in Chinese Tech to Protect National Security
The Biden administration is considering new rules to restrict US investments in Chinese technology sectors like semiconductors, quantum computing, and AI. These technologies are crucial for modernizing China’s military.
The proposed Treasury Department rules would prohibit certain US investments in Chinese companies developing these advanced technologies. The aim is to prevent American financing from aiding China in developing technologies 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.”
Earlier, President Biden signed an executive order calling for the investment ban, which will largely affect venture capital and private equity firms that do business with Chinese companies. Investors will be required to notify the Treasury Department about certain transactions, and some types of investments will be explicitly prohibited. The Treasury Department will have the power to force divestments, and violations could be referred to the Justice Department for criminal prosecution.
In May, President Biden directed his Trade Representative to increase tariffs on $18 billion 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 also noted that China’s forced technology transfers and intellectual property theft have contributed to its control of a significant portion of global production for critical inputs necessary for technologies, infrastructure, energy, and health care, creating unacceptable risks to America’s supply chains and economic security.
