Beijing may hit back as US puts brakes on China tech investors
could make it difficult for American internet giants to operate in its vast market as Washington presses ahead with new steps to block Chinese companies from investing in startups in Silicon Valley, according to analysts.
With the trade war between the US and China morphing into a tit-for-tat on retaliatory measures from tariffs to investment restrictions, Beijing has already garnered sufficient armoury to hit back at American tech companies.
Already, “the Chinese government has issued close to 300 new national standards related to cybersecurity over the past several years,” covering products ranging from software to routers, switches, and firewalls, said Samm Sacks, analyst at the Center for Strategic and International Studies (CSIS), a think tank in Washington.
These standards “contribute to making China an increasingly difficult market for foreign firms to operate,” said Sacks.
She argued that “the Chinese government can use standards to pressure companies to undergo invasive product reviews where sensitive intellectual property (IP) and source code (even if not explicitly written) may be required as part of verification and testing.” The foreign companies will therefore need to redesign products for the Chinese market because of the standards issued by the government there.
The CSIS analyst said also that “Beijing uses vague language in standards, like in many Chinese laws and regulations, to avoid issues such as World Trade Organization (WTO) challenges, while allowing the government maximum flexibility and discretion to apply onerous provisions when it sees fit.”
US President Donald Trump signed on August 13 a $716 billion defence policy Act that includes provisions for strengthening the Committee on Foreign Investments in the US (CFIUS) that reviews foreign investments with national security implications.
Moreimportantly,thenewlaw includes the controversial Foreign Investment Risk Review Modernization Act to shut the door for China’s venture funds and tech investors from taking minority stakes in American start-ups in areas such as robotics, artificial intelligence (AI), biotechnology and 3D printing.
WASHINGTON:China