The US will restrict China’s technology investments

EXECUTIVE REGULATION: The restrictions would target investment in projects sensitive to national security, such as B. in artificial intelligence and code-cracking technologies

US President Joe Biden’s administration is close to finalizing an executive order that would limit investment by US companies in parts of China’s economy, including advanced technologies that could enhance China’s military and intelligence capabilities, people familiar with the matter said .

The effort is at an advanced stage, and Biden is poised to request funding for it at Thursday’s fiscal 2024 budget meeting, reports to the US Congress seen by Bloomberg showed.

The order would add to the government’s toolbox to address concerns about China’s technological advances, including export controls on advanced semiconductors and new guidance on screening Chinese investments in the US.

Photo: Reuters

While working on the guidelines, officials discovered that US investments in China often bring intangible benefits such as managerial and technical expertise that can help Chinese firms grow quickly, the people said.

The restrictions are designed to capture investments in projects that have clear national security applications, including artificial intelligence and code-breaking technologies.

US companies are not currently subject to US government restrictions on investing in China’s technology sector. Some have invested in Chinese companies developing cutting-edge supercomputing capabilities and other technologies that can be used in military applications.

The administration is working with allies and partners to develop the program and on Friday submitted two reports to Congress detailing the costs of setting up a so-called “outbound investment program” with the US Treasury Department.

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The outlines of the program, which would target some sensitive “dual-use” technologies that can be used in commercial and military applications, are included in brief reports to Congress seen by Bloomberg.

Although no specific technologies or countries are mentioned in the reports, some advanced semiconductors, quantum computing and artificial intelligence are expected to fall within the scope of the program.

It’s “a good first step to ensure US investment doesn’t fuel the Chinese Communist Party’s capabilities and create dangerous dependencies,” said US Rep. Rosa DeLauro, the top Democrat on the US House Appropriations Committee.

The program would be implemented and administered by the Treasury Department in coordination with the US Department of Commerce, which maintains extensive lists of individuals and companies prohibited from receiving some sensitive US exports.

However, the new program is broader. Investments that would be subject “are of a nature that are not currently covered by export controls, sanctions or other related agencies,” the reports to Congress said.

Measures could include banning the investments or seeking more information about other investments, one of the reports said.

“Work is underway to ensure clear definitions and scopes where necessary, to facilitate expeditious implementation, and to achieve the goal of preventing US capital and know-how from being exploited in ways that undermine US national security.” threatened without unduly burdening US investors and companies,” the report said.

“Work is also underway to work with international partners and allies on this issue,” it said.

A final version of the program is expected “in the near future” and would include an opportunity for public comment, according to one of the reports.

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Biden’s presidential budget request for next year would recommend additional resources for the program, which is estimated to cost $10 million to administer this fiscal year.

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