Joe Biden plans to bar some U.S. investments in China, track others: Sources

According to three sources, the Biden administration is in the process of making a plan to ban investment. in some Chinese technology-based companies and heighten vigilance over others. It is a strategy to clamp down on the money that American companies have invested in delicate Chinese areas.

According to two sources, America will impose a ban on certain investments connected to chip manufacturing. The sources also said the upcoming rules would track the sweeping new limits the US imposed in October on exports of supercomputers, chipmaking tools, and American artificial intelligence (AI) chips to China, among other technologies.

The proposed plan will be shaped into an administrative order. which is going to appear in the White House in the next few months.

China in Washington has accused US investors of transferring vital expertise and capital to Chinese tech firms that could help Beijing’s military capabilities.

No comments were given by The White House on the topic.

A spokesperson for the Chinese Embassy in Washington said in a statement that no amount of limitations or suppression can pull back the speed of scientific and technological development in china. He further added that unwarranted restrictions on regular trade and economic cooperation by U.S. politicians will only miss development opportunities.

Post the sighting of one of china’s surveillance balloons over the United States, the relationship between the two countries has soured reminding china watchers to foresee more corrective measures from  Washington in relation to Beijing in a short period. That may comprise the hoped-for outbound investment order.

Apart from the ban on some investments, the government will consider a wide range of transactions as notice and go, requiring investors to simply notify the government of their plans without any risk of disapproval.

According to a source, the Biden administration would allow evaluation of the rules before the plan to get effective.

While features of the order may change, the layered perspective shows that the  Biden administration is making efforts to take a cutting edge to control U.S. investments in China post its one-sided launch of the October export curbs on China-fumed allies and U.S. firms.

It also demonstrates the government’s need to get more information on U.S. investment in Chinese tech startups.  A Georgetown University think tank reported earlier this month that  U.S. investors accounted for nearly a fifth of investments in Chinese AI companies from 2015 to 2021, transactions valued at $40.2 billion including the investment units of chipmakers Intel Corp and Qualcomm Inc.

The executive order, which was previously scheduled to be issued in the fourth quarter of last year, was delayed ahead of Secretary of State Antony Blicken’s planned February visit to China to avoid upsetting Beijing. However, the yatra was later postponed due to the Chinese spy balloons incident.

The issue was first pointed out by National Security Advisor Jake Sullivan in July 2021, when he noticed that the outbound U.S. investment flows into Chinese technology might harm national security and erode export controls.

Peter Harrell, a former White House official who left the administration late last year, firmly suggests that the government should set up a narrow-scope rule requiring the declaration of investments in some of the main Chinese technologies, with the capability to restrict or block the limited number of transactions that are likely to raise serious national security risks.

Attempt to embody an outbound investment screening plan in legislation failed last year in Congress. although, a spending bill endorsed into law in  December gave the  U.S. Departments of Treasury and Commerce $10 million each for identifying what is needed to execute a plan to tackle national security threats from outbound investments in some areas. Their reports are yet to come in the latter part of this month.