President Joe Biden has enacted an executive order prohibiting certain new U.S. investments in China’s sensitive technology sectors, explicitly identifying semiconductors and microelectronics, quantum information technologies, and specific artificial intelligence systems. This measure, aimed at averting American assistance in China’s military advancements, underscores a declared national emergency.
The long-awaited order empowers the U.S. Treasury secretary to either prohibit or restrict U.S. investments in Chinese entities operating in the aforementioned technology sectors. While the administration specifies that the restrictions will target ‘narrow subsets’ within these fields, it has not provided detailed specifics. The proposal remains open for public input.
This initiative is designed to prevent American capital and know-how from contributing to China’s development of technologies with potential military applications that could compromise U.S. national security. The affected investment types include private equity, venture capital, joint ventures, and greenfield investments.
In a letter to Congress, President Biden emphasised the need for the executive order, citing the threat posed by advancements in ‘sensitive technologies and products critical to military, intelligence, surveillance or cyber-enabled capabilities’ by nations such as China.
China has expressed significant concern over the order. A statement from the Chinese Commerce Ministry articulated China’s position that the measure impacts the regular operations and decision-making of enterprises and disrupts the international economic and trade order. The ministry urged the U.S. to adhere to market economy laws and fair competition principles, cautioning against ‘artificially hindering global economic and trade exchanges and cooperation, or establishing obstacles for the recovery of the world economy.’
Additionally, the Chinese Foreign Ministry has conveyed strong dissatisfaction and resolute opposition to the restrictions, having filed solemn representations with the U.S. The ministry highlighted President Biden’s earlier assurances that there was no intent to decouple from China or impede China’s economic progress, urging the U.S. to honour this commitment.
This executive order signifies a critical juncture in U.S.-China relations, reflecting escalating measures to address security concerns associated with technological advancements.
