To prevent American investors from financing Chinese companies, the Biden administration is introducing new rules
The US government is reportedly developing a new program that could ban US participation in certain Chinese industries. The move is seen as an attempt to protect US technological advantages in the escalating rivalry between the two countries.
People familiar with the program expect it to cover private equity and venture capital investments in advanced semiconductors, quantum computing and some forms of artificial intelligence. The goal is to prevent US investors from providing financing and expertise to Chinese companies that could improve the speed and accuracy of Beijing’s military decisions.
According to reports provided to lawmakers on Capitol Hill on March 3, the U.S. Treasury and Commerce Departments are considering a new regulatory system to address U.S. investments in advanced technologies abroad that could pose national security risks. The reports did not identify specific technology sectors that the Biden administration considered risky, but noted that sectors that could improve rivals’ military capabilities would be a focus of the program.
Read also: China sending deadly aid to Russia is likely to shift the war dynamic in Ukraine in Putin’s favor
The program would aim to “prevent U.S. capital and expertise from being exploited in ways that threaten our national security, without placing an undue burden on U.S. investors and companies,” the U.S. Treasury Department report said.
The reports did not name the countries that would be placed under the new rules, but it is expected that the Biden administration’s work on the new rules will, in practice, largely relate to US investments in China.
The US Treasury and Commerce Departments are expected to finalize their policies in the near future and seek additional funding for the investment program in the White House budget to be released next week. The new program will be subject to public comment and the Treasury will administer it in consultation with the Department of Commerce.
Read also: ‘Proof of great friendship’: China sends Pakistan another $1.3 billion
The rules regulating US investments in other countries will be part of a broader effort by the Biden administration to influence China’s ability to create technologies that US officials believe may pose a risk to national security.
In 2022, the US government announced export restrictions on advanced semiconductors and chip manufacturing equipment to slow China’s military advance. The US government has been working for months on an executive order laying down the new investment rules.
Wally Adeyemo, deputy US Treasury Secretary, recently said that Washington should frame the rules for the investment program to address national security risks and not create an unfair economic advantage. Adeyemo made the comments at a recent public event.
(with ANI inputs)