On August 9th, local time, US President Joe Biden signed an executive order authorizing the US Treasury Secretary to prohibit or limit US new investments in three areas (semiconductors and microelectronics, quantum information technology, and certain artificial intelligence systems) related to Chinese entities, and requiring government notification in other technological sectors.
The US government stated that these restrictions would apply to a "small scope" within these three domains, with details yet to be outlined. Moreover, the measure targets private equity, venture capital, joint ventures, and investments in new projects.
The proposal also emphasizes investments in Chinese companies developing software for designing computer chips and manufacturing equipment for computer chips. The US, Japan, and the Netherlands dominate these sectors, while China has been striving to develop domestic alternatives.
The US Treasury Department pointed out that these regulations will only impact future investments and won't affect existing ones, but may require disclosure of previous transactions.
The order will take effect next year, is not retroactive, and does not include industries like biotechnology. Passive investments, publicly traded securities, index funds, and other assets might eventually be exempted.
The White House stated that Biden consulted allies on this plan and took feedback from the Group of Seven (G7). The proposal is open for public feedback.
The Semiconductor Industry Association expressed hope that the order would enable "US chip companies to compete in a fair environment and access major global markets, including China."
In response, the Chinese Embassy in Washington expressed "great disappointment." A spokesperson for the embassy highlighted the White House's disregard for China's "deep concerns" about the plan. The spokesperson also noted that over 70,000 US companies operate in China and these restrictions would harm businesses in both countries, disrupt normal cooperation, and diminish investor confidence in the US.
On August 10th, spokespersons from China's Ministry of Foreign Affairs and Ministry of Commerce also responded.
The Foreign Ministry's spokesperson expressed strong dissatisfaction and resolute opposition to the US's insistence on introducing investment restrictions against China and has made serious representations to the US. Accusing the US of masking its true intentions behind "national security", the spokesperson said that the US aims to deprive China of its right to development and maintain its hegemonic self-interest, marking it as blatant economic coercion and technological bullying. The actions seriously violate market economy principles and fair competition, disrupting global trade order and supply chain stability.
China urges the US to fulfill President Biden's commitments of not decoupling from China and not obstructing China's economic development, to stop politicizing, weaponizing, and using trade and technology issues as tools, and to immediately revoke incorrect decisions.
The Commerce Ministry's spokesperson commented that they have noted the US's release of the foreign investment review executive order. By limiting its own companies from investing abroad and advocating "de-risking" in the investment realm, the US seriously deviates from its traditionally championed principles of market economy and fair competition. China expresses serious concerns about this and reserves the right to take measures.
