On Wednesday, the Biden administration plans to announce new restrictions on American investments in a number of China’s high-tech sectors.
The US limits investments in Chinese military-backed companies for technologies that pose a threat to national security. (Photo: iStock)
It appears likely that new restrictions on investments in specific sectors deemed to pose security risks, which are scheduled to be released on Wednesday, will open a new front in the trade war between the United States and China.
According to people with knowledge of the discussions, the Biden administration intends to announce new restrictions on American investments in a few high-tech Chinese industries on Wednesday. While supporters have justified the action as being necessary to safeguard national security, Beijing will undoubtedly take offense.
The new restrictions would be one of the first significant ones taken by the United States to restrain outgoing financial flows amid an economic standoff with China. It might pave the way for increased investment restrictions between the two nations in the years to come.
According to the sources, the new restrictions would prevent private equity and venture capital firms from investing in specific high-tech industries like quantum computing, artificial intelligence, and advanced semiconductors in an effort to stop the flow of American capital and knowledge to China.
The government would have better visibility into financial exchanges between the United States and China as a result of the requirement that businesses investing in a wider range of Chinese industries report their activity.
The White House chose not to respond. However, as they work to combat security threats without interfering with legitimate business with China, Biden officials have emphasized that outright new restrictions on investment would specifically target a few sectors that could help the Chinese military or surveillance state.
Recent efforts by the Biden administration to defuse tensions with China have included sending Treasury Secretary Janet L. Yellen and other top officials to meet with Chinese counterparts. Biden officials have argued in recent speeches that targeted actions taken against China are solely intended to safeguard U.S. national security, not to harm the Chinese economy.
However, the Biden administration has also pushed for the development of suppliers outside of China in order to “de-risk” critical supply chains, and it has gradually tightened its new restrictions on the export of certain technologies, such as semiconductors for advanced computing, to China.
Certain foreign investments by people and companies have long been restricted by the Chinese government. There are new restrictions on outgoing investments from other governments as well, including those of Taiwan and South Korea.
However, the Biden administration has also pushed for the development of suppliers outside of China in order to “de-risk” critical supply chains, and it has gradually tightened its restrictions on the export of certain technologies, such as semiconductors for advanced computing, to China.
Certain foreign investments by people and companies have long been restricted by the Chinese government. There are new restrictions on outgoing investments from other governments as well, including those of Taiwan and South Korea.
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