Biden Forbids a Variety of US High-Tech Projects in China Because of Potential National Security Risks.

 The edict limits spending in semiconductors and microelectronics, quantum technology, and artificial intelligence (AI) starting in the following year.

photo by: Adam Schultz -

On Wednesday, Joe Biden signed an executive order that strictly forbids certain US investments in sensitive Chinese technology and mandates government notification of funding in other tech industries.

In three industries—semiconductors and microelectronics, quantum information technology, and specific artificial intelligence systems—the long-awaited decree empowers the US treasury secretary to forbid or limit certain US investments in Chinese businesses.

In a letter to Congress, Biden stated that he was announcing a national emergency in response to the threat posed by the development of "sensitive technologies and products critical to the military, intelligence, surveillance, or cyber-enabled capabilities" by nations like China.

The plan calls for investments in Chinese businesses creating tools and software for chip manufacturing. These fields are dominated by the US, Japan, and the Netherlands, but the Chinese government has been attempting to develop domestic alternatives.

Although US officials said the limitations were intended to address "the most acute" national security vulnerabilities and not to split the two countries' heavily interconnected economies, the measure may increase tensions between the two largest economies in the world.

Chuck Schumer, the head of the Democratic Party in the Senate, hailed Biden's directive, saying: "For far too long, American money has fueled the rise of the Chinese military. To ensure that American investments do not support Chinese military development, the United States is taking a first strategic move today. He contends that Congress must strengthen and codify limits.

Republicans claimed that the Biden directive was insufficient.

Michael McCaul, chairman of the House foreign affairs committee, applauded the decision to limit new outbound investments in China but expressed worry that "existing technology investments as well as sectors like biotechnology and energy" were left out.

The order aims to stop American resources from funding the development of technologies that can aid China's military modernization and jeopardise US national security. Private equity, venture capital, joint ventures, and greenfield investments are its main areas of interest.

The majority of investments covered by the directive will need to be reported to the government. Certain transactions will not be allowed. According to the Treasury, it plans to exempt "certain transactions," including maybe those involving publicly traded securities and intracompany transfers from US parent companies to their foreign subsidiaries.
On Wednesday, a representative of the Chinese embassy in Washington stated that China is "very disappointed" by the action.

Liu Pengyu stated in a statement that the restrictions would "seriously undermine the interests of Chinese and American companies and investors" and added, "China will closely follow the situation and firmly safeguard our rights and interests."

China's commerce ministry charged the US with upsetting global supply networks and industry in Beijing.

An official spokeswoman claimed that the presidential order "seriously departs from the market economy and fair competition principles the US has always promoted, and affects companies' normal operation decisions."
The Biden administration's "narrowly tailored proposal is almost laughable," according to Republican Senator Marco Rubio. It is full of gaps, blatantly overlooks the dual-use nature of key technology, and leaves out sectors that the Chinese government views as essential.

According to a person briefed on the directive, it will be enacted after receiving numerous rounds of public feedback, including a preliminary 45-day comment period.

In order to further define the program's scope and to allow for public discussion, regulators want to publish an advance notice of proposed rule-making before submitting a formal proposal.

According to Emily Benson of the Centre for Strategic and International Studies (CSIS), a nonpartisan organisation that conducts policy research, military users and uses of investments in artificial intelligence (AI) will be prohibited, while other investments in the industry will only need to be disclosed to the government.

According to Benson, it will be up to the administration to decide what AI qualifies as military.
The individual who was briefed on the directive stated that the regulations pertaining to AI are still being developed. The guy claimed that quantum computing worked the same way but that some sensors and other associated items would be prohibited. The speaker continued that research and universities might be eligible for exclusions.

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