President Biden signed an executive order on Wednesday to effectively regulate and restrict US-based investments in China’s high-tech industries. Rather than solely driven by economic interests, this move is primarily centered around national security concerns. The order specifically focuses on advanced computer chips, microelectronics, quantum information technologies, and artificial intelligence. By doing so, the administration aims to limit China’s ability to utilize US investments in their technology sector to enhance their military capabilities, while still maintaining essential levels of trade between the two nations.
The ongoing competition between the US and China, characterized by differing values and geopolitical interests, is becoming increasingly evident. While the Biden administration is not seeking to completely sever ties with China, they have implemented measures such as restricting the export of advanced computer chips and maintaining trade tariffs originally introduced by former President Trump. Conversely, China has imposed crackdowns on foreign companies. Biden has suggested that recent US efforts to strengthen alliances with countries like Japan, South Korea, Australia, and the European Union have tempered China’s global ambitions and economic standing. Consultations with allies and industry stakeholders have played a significant role in shaping this executive order.
During a fundraising event in June, Biden expressed the need to be concerned about China while simultaneously reassuring donors. Administration officials who previewed the order emphasized how China has exploited US investments to assist in the development of weaponry and military modernization. The new restrictions are not designed to disrupt China’s economy, but rather to complement the export controls on advanced computer chips implemented last year, which faced objections from Chinese officials. The Treasury Department will be responsible for monitoring these investments and will propose definitions that align with the presidential order, opening the process for public comments. This issue has garnered bipartisan support, as demonstrated by a Senate vote in July (91-6) to amend the National Defense Authorization Act and introduce requirements for monitoring and limiting investments in countries of concern, including China. (Read more US-China relations stories.)
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