Biden restricts US investments in China's high-tech sectors

U.S. President Joe Biden has taken action by signing an executive order on Wednesday, introducing limitations on American investments in mainland China, Hong Kong, and Macao. This order, directed towards high-tech domains including artificial intelligence (AI), semiconductors, and quantum technology, has sparked discontent from China.

Biden restricts US investments in China's high-tech sectors

Under the executive order, U.S. individuals and entities face restrictions on specific transactions within semiconductors, microelectronics, quantum information technologies, and AI sectors. Notably, these transactions require notification to the Treasury Department. Additionally, President Biden has declared a national emergency in response to the rapid technological progress of countries raising concerns about potential threats to U.S. national security.

The order grants authority to the U.S. Treasury secretary to impose restrictions or outright ban American investments in Chinese entities operating within semiconductors, microelectronics, quantum technology, and specific artificial intelligence systems. This measure underscores the mounting apprehensions regarding the strategic consequences of transferring sensitive technologies to potentially adversarial nations.

The core intent behind the order is to thwart inadvertent bolstering of China's military capabilities and safeguard U.S. national security. Private equity, venture capital, joint ventures, and greenfield investments all fall under the ambit of this regulation.

China's swift response conveyed "grave concern" about the executive order, asserting its right to retaliate. The Chinese Commerce Ministry emphasized that this order disrupts business operations, impacting international economic and trade norms.

While China voices criticism, proponents argue that this measure is essential to prevent unauthorized acquisition of critical technologies that could compromise U.S. security interests.

The executive order's enactment fulfills a long-awaited step to address challenges arising from the rapid advancement of high-tech sectors in countries perceived as potential adversaries. It reinforces the Biden administration's dedication to upholding national security amidst intricate global technological dynamics.

The Treasury Department, in collaboration with agencies such as the Commerce Department, will oversee the order's implementation. Public input is being sought to ensure informed execution.

The Treasury Department clarified that the order strives to safeguard national security while upholding the U.S.'s commitment to open investment. Certain transactions, like those involving publicly traded instruments and intra-company transfers, may warrant exemptions.

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