U.S. President Joe Biden meets Chinese President Xi Jinping on the sidelines of the G-20 leaders’ summit in Bali, Indonesia, on Nov. 14, 2022.
Kevin Lamarque | Reuters
President Joe Biden is predicted to issue his long-awaited executive order to screen outbound investments in sensitive technologies to China early next week, in keeping with people acquainted with the matter.
A White House spokesman declined to comment.
The goal of the order is to forestall U.S. capital and expertise from accelerating the event of technologies that may support China’s military modernization and threaten U.S. national security.
The order is predicted to focus on U.S. private equity, enterprise capital and three way partnership investments in China in semiconductors, quantum computing and artificial intelligence. Most investments captured by the order would require that the federal government be notified about them. Some transactions will probably be prohibited, sources have said.
“It fills a niche in our current regime,” said Cordell Hull, a former U.S. Commerce Department official. “We’ve prohibitions on exporting the technology. We’ve restrictions on in-bound investment. This can help to plug that gap on funding and know-how and provides the federal government visibility into these capital flows.”
The regulations usually are not expected to take effect immediately and the administration will solicit comment on its proposals, in keeping with sources. It has already conducted meetings with stakeholders and has been consulting with allies. It also got here up during U.S Treasury Secretary Janet Yellen’s recent trip to China.
Yellen last month described the potential restrictions as “highly targeted, and clearly directed, narrowly, at just a few sectors where we’ve got specific national security concerns.”
Laura Black, a former policy director for the Committee on Foreign Investment in america (CFIUS), which reviews certain transactions within the U.S., said the order was not expected to ascertain a “reverse CFIUS,” because it could not involve a case-by-case review where a committee would clear, mitigate or block a transaction. Nonetheless, it is predicted to ban certain investments, she said.
Two sources said briefings were expected on Monday, with the announcement Tuesday. However the timing has slipped persistently before and will again.
Sources have told Reuters the investments that will probably be restricted are expected to trace export control rules for China issued by the U.S. Department of Commerce in October.
Emily Kilcrease, a former U.S. official who has worked on China investment policy, said the U.S. also has been attempting to define what counts as artificial intelligence, and aiming to also control offshore investments by U.S. people and corporations.
She described the order as a significant step in organising a U.S. system of oversight to screen transactions to countries of concern and said that it was expected to expand in time.
She also said the U.S. ought to be prepared for retaliation by China. “We should always anticipate that,” she said.
