United States President Joe Biden has issued an executive order with the aim of preventing specific American investments in China, particularly those related to sensitive technology, and requiring prior governmental approval for funding in other technological sectors.
This much-anticipated action, which could potentially add strain to bilateral relations, mandates the US Treasury secretary to narrow down investments in areas like quantum computing, artificial intelligence, and advanced semiconductors.
In a letter addressed to Congress on August 9th, Biden articulated that he was declaring a national emergency to address the risk of technological advancements by nations such as China, particularly in areas vital to military, intelligence, surveillance, and cyber-enabled capabilities.
China’s strides in these domains are identified as “an unusual and extraordinary threat to the national security of the United States,” and certain American investments “risk exacerbating this threat,” according to the order cited by Reuters news agency.
The executive order is designed to exert pressure on China’s semiconductor industry, which relies heavily on foreign-made equipment for chip design and manufacturing tools. China has been investing significantly to cultivate its burgeoning domestic semiconductor industry and construct fabrication plants (fabs), a domain currently dominated by the US, Japan, and the Netherlands.
The Biden administration asserts that these restrictions primarily target the most pressing national security risks and do not intend to create a separation between the interdependent economies of the two countries.
However, the move has sparked varied reactions, with the Democratic party applauding the decision, while the Republican party argues that the prohibitions should have extended to other sectors as well.
Senate Democratic Leader Chuck Schumer remarked, “For too long, American money has helped fuel the Chinese military’s rise. Today, the United States is taking a strategic first step to ensure American investment does not go to fund Chinese military advancement.” Schumer emphasized the necessity of enshrining restrictions in legislation and refining them.
On the other hand, Republicans expressed that the Biden order fell short of being comprehensive. House Foreign Affairs Committee Chairman Michael McCaul commended the move to curtail new investments in China but expressed concern about the omission of existing technology investments and sectors like biotechnology and energy.
It’s important to note that these restrictions will only affect future investments and will not impact existing ones, as clarified by an administration official speaking to Reuters.
A senior US official closely involved in the development revealed that the order will be enacted next year following several rounds of public input, including an initial 45-day comment period.
Post Your Comments