President Biden Escalates Confrontation with China
Banning American Investments in Key Technology Industries
President Biden signed an executive order on Wednesday that bans American investments in key technology industries, escalating the ongoing confrontation with China. The order specifically targets industries that could potentially enhance Beijing’s military capabilities. This move is part of a series of actions aimed at putting more distance between the two largest economies in the world.
Targeting Key Technology Industries
The executive order will prohibit venture capital and private equity firms from investing in Chinese efforts to develop semiconductors, microelectronics, quantum computers, and certain artificial intelligence applications. The objective is to safeguard national security, but China is expected to view it as a broader campaign to contain its rise.
Administration’s Commitment to National Security
The Treasury Department stated that the Biden administration is committed to keeping America safe and protecting technologies critical to military innovation. The executive order is a narrow and targeted action supporting existing export controls, while still maintaining an open investment policy.
Friction in U.S.-China Relationship
The new executive order comes at a particularly tense moment in the U.S.-China relationship. Past export controls on crucial technologies have already triggered retaliation from China. The U.S. government has been actively sharing intelligence reports with allies to emphasize the importance of Western investment in China’s military modernization plans.
Efforts to Stabilize Relations
President Biden has expressed his desire to stabilize relations with China. Efforts to reopen communications have been made by sending top officials, including Secretary of State Antony J. Blinken and Treasury Secretary Janet L. Yellen, to engage with their Chinese counterparts. Commerce Secretary Gina Raimondo is also expected to visit China in the near future.
A Shift in Investment Strategy
The U.S. has traditionally encouraged American investors to deepen their ties with the Chinese economy, but recent reviews have indicated that such investments have indirectly fueled China’s military capabilities. The Biden administration’s executive order marks a shift in the U.S. strategy by implementing limits on investment flows into China, which has not been done before.
Bipartisan Effort and Industry Response
There is currently a bipartisan effort in Congress to impose similar limits, and the administration aims to align their upcoming rules with the congressional framework. The semiconductor industry responded cautiously to the new order, expressing hopes for fair competition and access to global markets.
China’s Likely Response
China’s government is expected to criticize President Biden’s executive order. The full response may be delayed as Chinese leaders are currently in their summer retreat. China has its own investment restrictions that are broader than the U.S. rules and reflect a different technology policy that encourages investments in businesses with geopolitical advantages.
Source: The New York Times