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Governments React to Biden’s Executive Order on Chinese Tech

By  |  August 14, 2023
Biden

In a move that could fuel tensions between the world’s two largest economies, U.S. President Joe Biden issued an executive order last week that authorizes the U.S. Treasury secretary to prohibit or restrict U.S. investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems.

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    The Biden administration has cited national security in its justification for the order, with Senate Democratic leader Chuck Schumer praising the move, saying: “For too long, American money has helped fuel the Chinese military’s rise. Today the United States is taking a strategic first step to ensure American investment does not go to fund Chinese military advancement.”

    According to Reuters, China expressed its disappointment over the order with a spokesperson for the Chinese embassy in Washington, Liu Pengyu, saying: “The curbs would seriously undermine the interests of Chinese and American companies and investors. China will closely follow the situation and firmly safeguard our rights and interests.”

    The order is aimed at preventing American capital and expertise from contributing to the development of technologies used by China for its military modernization, which could undermine US national security.

    Related: Biden Calls On Big Tech To Insure AI Safety

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    In response to the news, Prime Minister Rishi Sunak’s government in the UK said the executive order gave important clarity on the U.S. approach. A spokesperson said: “The UK will consider these new measures closely as we continue to assess potential national security risks attached to some investments.”

    Official data shows that China is not a significant destination for British foreign investment, with the figure standing at 10.7 billion pounds ($13.6 billion) at the end of 2021, compared with 461.4 billion pounds in the United States. British investment in Hong Kong was recorded at 77.6 billion pounds.

    Not all have been in favor of the Biden order, however, with the House foreign affairs committee chairman Michael McCaul praising the move to restrict new outbound investments in China, but saying “the failure to include existing technology investments as well as sectors like biotechnology and energy is concerning.”

    Republican senator Marco Rubio echoed this sentiment, saying: “The Biden administration’s narrowly tailored proposal is almost laughable. It is riddled with loopholes, explicitly ignores the dual-use nature of important technologies, and fails to include industries China’s government deems critical.”

    It is expected to be implemented next year, a person briefed on the order said, after multiple rounds of public comment, including an initial 45-day comment period. Emily Benson of the Center for Strategic and International Studies (CSIS), a bipartisan policy research organization, said she expects investments in artificial intelligence (AI) to be prohibited to military users and uses, and that other investments in the sector will only require notification to the government.

    Overall, the order has shone a light on the growing tensions between the two nations, and how these will impact the global economy and countries such as the UK. Responses to the order range from approval to criticism, but with the shift towards a greater focus on high-tech investments, it looks set to be the new normal.

    Source: Reuters