Biden to restrict investments in China, citing national security threats
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The measure would be one of the first significant steps the US has taken in its economic clash with China to clamp down on financial flows.
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WASHINGTON – The Biden administration plans on Wednesday to issue new restrictions on American investments in certain advanced industries in China, according to people familiar with the deliberations.
It is a move that supporters have described as necessary to protect national security, but that will undoubtedly rankle Beijing.
The measure would be one of the first significant steps the United States takes in its economic clash with China to clamp down on financial flows. It could set the stage for more restrictions on investments between the two countries in the years to come.
The restrictions would bar private equity and venture capital firms from making investments in certain high-tech sectors, the people said. These would include quantum computing, artificial intelligence and advanced semiconductors.
The move would be a bid to stop the transfer of American dollars and expertise to China.
The restrictions would also require firms making investments in a broader range of Chinese industries to report that activity, giving the government better visibility into financial exchanges between the US and China.
The White House has declined to comment. But Biden officials have emphasised that outright restrictions on investment would narrowly target a few sectors that could aid the Chinese military or surveillance state as they seek to combat security threats, but not disrupt legitimate business with China.
Said Ms Emily Benson, director of project on trade and technology at the Centre for Strategic and International Studies, a Washington think-tank: “There is mounting evidence that US capital is being used to advance Chinese military capabilities, and that the US lacks sufficient means of combating this activity.”
The Biden administration has recently sought to calm relations with China, dispatching Treasury Secretary Janet Yellen and other top officials to talk with Chinese counterparts.
In recent speeches, Biden officials have argued that targeted actions taken against China are aimed purely at protecting US national security, not at damaging the Chinese economy. But the Biden administration has continued to push to “de-risk” critical supply chains by developing suppliers outside China.
The US has also steadily ramped up its restrictions on selling certain technologies to China, including semiconductors for advanced computing.
The Chinese government has long restricted certain foreign investments by individuals and firms. Other governments, such as those of Taiwan and South Korea, also have restrictions on outgoing investments.
But until now, the US government had left financial flows between the world’s two largest economies largely untouched. Just a few years ago, US policymakers were working to open up Chinese financial markets for US firms.
In the past few years, investments between the US and China have fallen sharply as the countries severed other economic ties. But venture capital and private equity firms have continued to seek out lucrative opportunities for partnerships as a way to gain access to China’s vibrant tech industry. NYTIMES
