BIDEN SIGNS ORDER ON CHINA TECH INVESTMENT
Order would give Treasury Dept. authority in 3 areas
President Joe Biden signed an executive order Wednesday aimed at curbing the flow of U.S. investment and management know-how into a limited range of Chinese firms that the administration fears could fuel Beijing’s military ambitions.
The order is a narrow, initial step that will not take effect until next year, but it is a signal to China’s leadership that Washington — despite a recent warming in diplomatic relations — intends to continue to impose restrictions on Beijing’s access to critical technology.
Chinese officials reacted sharply to the news of the pending executive order. “The U.S. habitually politicizes technology and trade issues and uses them as a tool and weapon in the name of national security,” Chinese Embassy spokesperson Liu Pengyu said in a statement to The Washington Post. “We will closely follow the developments and firmly safeguard our rights and interests.”
China hawks in Congress, meanwhile, say the proposal — which excludes sectors such as biotechnology and energy — does not go far enough.
“The administration scaling back — at a time where aggressive action is needed more than ever — continues the trend of appeasing industry at the cost
of national security,” said Rep. Michael McCaul RTexas, chair of the House Foreign Affairs Committee.
“We need to stop the flow of American dollars and know-how supporting the [Chinese Communist Party’s] military and surveillance technology rather than solely pursuing half measures that are taking too long to develop and go into effect,” he added.
The White House order comes amid a tenuous thaw in a relationship marked by on-again, off-again engagement, which was frustrated by the appearance of a Chinese surveillance balloon over the United States earlier this year.
Commerce Secretary Gina Raimondo is expected to travel to Beijing this month, following recent trips by Secretary of State Antony Blinken and Treasury Secretary Janet Yellen.
The order, the product of a two-year internal debate, gives Yellen the authority to regulate U.S. investment in three categories of Chinese
companies: quantum computing, artificial intelligence related to military uses, and advanced semiconductors.
“Rapid advancement in semiconductors and microelectronics, quantum information technologies, and artificial intelligence capabilities by [China] significantly enhances [its] ability to conduct activities that threaten the national security of the United States,” the order states.
It contemplates a block on U.S. investment into subsets of these sectors, such as artificial intelligence systems designed primarily for military and intelligence use, software for chip design automation and quantum technologies that “could compromise encryption and other cybersecurity controls and jeopardize military communications,” according to the Treasury Department notice of the proposed rule.
It also proposes a requirement that U.S. venture capitalists and other investors notify Treasury of prospective investment into companies developing technologies in some of these targeted sectors.
The Biden order kicks off a process to solicit comment that is expected to take several months and could result in a narrowing of the ban’s already limited scope.
The White House order comes as China seeks to develop a world-class fighting force by 2049, even as the country faces a slowing economy.
The lengthy delay in issuing the order — there were expectations last year that the White House would move quicker — reflects the complex nature of figuring out where to draw lines around dual-use technologies such as artificial intelligence. The administration has also faced pressure from U.S. business interests that don’t want to be cut off from potentially lucrative investments in China.
For months, there has been intense internal debate over the scope of the Chinese restrictions, with the Treasury Department consistently advocating a narrow approach and the Pentagon pushing for a broader mandate. By late last year, the debate was settled in favor of a more limited scope, excluding, for instance, electric vehicles and biotechnology.
“This is hard to get right,” Mike Pyle, deputy national security adviser, said in a recent appearance at the Carnegie Endowment for International Peace. “These are very technical questions.”