© Reuters. FILE PHOTO: U.S. President Joe Biden speaks during the signing event of the Science and CHIPS Act of 2022, on the South Lawn of the White House in Washington, U.S., August 9, 2022. REUTERS/Evelyn Hockstein /File Photo
By Karen Freifeld and Alexandra Alper
WASHINGTON (Reuters) – The Biden administration plans to completely ban investment in some Chinese tech companies and increase scrutiny of others, three sources said, part of a plan to crack down on billions USD that American companies have poured into sensitive sectors of China.
Two of the sources said the ban is expected to apply to some investments tied to chip production. The upcoming rules are likely to track new restrictions placed by the United States on the export of American artificial intelligence (AI) chips, chipmaking tools and supercomputers, among other technologies. , to China in October, sources also said.
The plan will be presented in an executive order that the White House is expected to announce in the coming months. China hawks in Washington blame American investors for transferring valuable capital and know-how to Chinese tech companies that could help enhance Beijing’s military capabilities.
The White House declined to comment.
“No restriction or repression can stop China’s speed of science and technology development,” a spokesman for the Chinese Embassy in Washington said in a statement. “U.S. politicians’ unwarranted restrictions on normal economic and trade cooperation between China and the United States will only … miss development opportunities.”
Relations with China took a turn for the worse after one of the country’s surveillance balloons was spotted flying over the United States, prompting China watchers to expect more sanctions from Washington against Washington. with Beijing shortly. That could include the long-awaited offshore investment order.
In addition to the ban on some investments, a series of transactions will be considered “notice and execute”, requiring investors to simply notify the government of their plans without risking any harm. chance is rejected.
A source said the Biden administration will give the industry a chance to weigh in on the proposed rules before the plan goes into effect.
While the details of the order are subject to change, the hierarchical approach suggests the Biden administration is attempting to use a scalpel to control U.S. investments in China after unilaterally issuing October’s export restrictions on China angered US allies and companies.
It also illustrates the government’s desire for more information on US investment in Chinese tech startups. A report by the Georgetown University think tank earlier this month found that US investors include investment units of chipmakers. Intel Corporation (NASDAQ:) and Qualcomm (NASDAQ:) Inc accounted for nearly a fifth of investments in Chinese AI companies between 2015 and 2021, deals worth $40.2 billion.
The executive order, previously expected to be issued in the fourth quarter of last year, was further delayed in order to avoid provoking Beijing ahead of Secretary of State Antony’s scheduled February trip. Blinken to China. That trip was later postponed because the balloon was spying on China.
National Security Adviser Jake Sullivan first raised the issue in July 2021 when he said that US outflows of investment capital into Chinese technology could harm national security and undermine national security. weakening export controls.
Peter Harrell, a White House official who left the administration late last year, told a House of Representatives committee earlier this week that he “strongly” recommends the government establish “a narrow matching regime.” required disclosure of investments in certain key Chinese technologies with the ability to “restrict or block a small number of transactions that pose a serious national security risk.”
Efforts to include an offshore investment screening scheme into law failed last year in Congress. However, a spending bill signed into law in December gave the U.S. Treasury and Commerce Department $10 million each to determine what was needed to implement a threat-resolving program. national security from “outward investment” in certain areas. Their report is due at the end of this month.
