US President Joe Biden has issued an executive order that aims to impose restrictions on certain American investments in sensitive high-tech areas in China, potentially escalating tensions between the two largest global economies. Expected to take effect next year, the regulations target sectors such as semiconductors and artificial intelligence, as the US seeks to limit China’s access to critical technologies.
In a letter to Congressional leaders, President Biden emphasized the significance of open investment for the US economy, but highlighted concerns that certain investments could accelerate the development of sensitive technologies in countries that may use them to counter US capabilities.
The executive order program intends to bar new investments in advanced semiconductors and specific quantum information technologies in China, including private equity, venture capital, and joint ventures, according to the Treasury Department. The aim is to prevent China from obtaining and exploiting advanced technologies that could contribute to military modernization and undermine US national security.
While the direct financial impact of the ban or notification regime might be small, experts suggest that it could have a broader chilling effect on bilateral investment over time. Though companies might not be directly subject to bans, they may reconsider the nature of their investments due to the uncertainty created by these restrictions.
The move comes after high-level US officials visited China, reflecting attempts by both nations to stabilize their relationship. Treasury Secretary Janet Yellen assured that any new measures would be transparent and narrowly targeted, focusing on specific sectors of national security concern.
Analysts note that while the restrictions are a part of a broader strategy, the US should work on gaining the support of other countries making similar investments in China for a more significant impact. The administration aims to demonstrate through targeted language that these restrictions will not disrupt investment cooperation between the two nations.
Though the curbs on outbound investments are not meant to halt deeper cooperation between the US and China, the administration needs to navigate diplomatic discussions to ensure their effectiveness.
SOURCE: Ref Image from KCTV
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