The president of the United States, Joe Biden, has signed an executive order that restricts his country’s investments in strategic technological areas in China, from artificial intelligence to quantum computing, to prevent the defense sector of the Asian country from benefiting from technology and US funds for its development. The measure will take effect next year.
The order, which also includes the area of advanced semiconductors, especially affects venture capital companies and US investors in joint ventures with Chinese firms. Companies will have to inform the Government of their investments in the three sectors concerned. Some transactions will be prohibited, but the government ensures that “clear line guidelines” will be offered on operations that will be banned and those that simply must be notified.
The order seeks to protect US national security and is not economically motivated, according to the White House, which insists that it will continue to allow investments in other areas towards its great rival. A senior official speaking on condition of anonymity stressed that the move is directed against “very specific targets”: “It is a very measured and very thoughtful step to try to prevent the People’s Republic of China from obtaining and using advanced technology for the modernization of its military and to undermine national security.”
In a letter sent to Congress, Biden specifies that he declares a national emergency to deal with the advances of countries like China “in sensitive technologies and products essential to their military, intelligence, surveillance or cyber capabilities.”
The initiative, according to the White House, complements others already adopted by the Biden Administration to limit Beijing’s access to US technology, in a strategy that the US National Security adviser, Jake Sullivan, has described as “a very high bar for a very small piece of land.” In October of last year, the US president issued an order imposing controls on exports of advanced semiconductor technology to the Asian giant, and is preparing to update this forecast. Other measures veto Chinese investments in strategic US sectors.
Before the entry into force of the order, the US government will enter into rounds of conversations with the affected sectors to hear their opinions, including a period of 45 days for public comments on the regulation.
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A “very limited” measure
The measure announced on Wednesday has been expected for a long time. The Secretary of the Treasury, Janet Yellen, had already noted her guidelines during her trip to Beijing this summer, in which she told the Chinese authorities about Washington’s plans and insisted on the message that this is a very limited measure that seeks to protect national security. The United States, assured the senior official, is still very interested in continuing and developing its abundant economic relationship with China.
But, despite being anticipated, the new rule may unleash a new wave of friction between Washington and Beijing. Both governments have just begun a timid period of thawing in their relations, after the passage and downing of a Chinese hot air balloon over United States territory in February triggered the cancellation of a trip to the country by Secretary of State Antony Blinken Asia and a plummeting of relations that have been deteriorating for years.
A meeting in Vienna between Sullivan and his Chinese counterpart, Wang Yi – now also foreign minister – marked the first step towards normalizing ties. The process was consolidated with the final celebration of Blinken’s visit to Beijing and Yellen’s trip.
Get the bilateral relationship back on track
But as the two governments try to implement the promise that Biden and Chinese President Xi Jinping made to each other in Bali in November last year — to get the bilateral relationship back on track to prevent the rivalry from escalating into conflict — Washington It maintains contacts with its Western allies to present a united front of technological restrictions towards China. This matter was one of those addressed at the meeting of the G7, the most industrialized countries, in Hiroshima (Japan) in May. So far, with mixed results.
Last Friday, the Chinese Embassy in Washington had declared that the United States “regularly politicizes technological and commercial issues and uses them as a weapon and tool in the name of national security.”
In a statement, the leader of the Senate, Democrat Chuck Schumer, has congratulated the initiative. “For too long American money helped fuel China’s military rise. Today the United States takes a first strategic step to ensure that US investments do not go to finance Chinese military progress.
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