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JOE BIDEN SIGNED AN EXECUTIVE ORDER WEDNESDAY

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WASHINGTON — President Joe Biden signed an executive order Wednesday to block
and regulate high-tech U.S.-based investments going toward China — a move the
administration said was targeted but it also reflected an intensifying
competition between the world’s two biggest powers.

The order covers advanced computer chips, micro electronics, quantum information
technologies and artificial intelligence. Senior administration officials said
that the effort stemmed from national security goals rather than economic
interests, and that the categories it covered were intentionally narrow in
scope. The order seeks to blunt China’s ability to use U.S. investments in its
technology companies to upgrade its military while also preserving broader
levels of trade that are vital for both nations’ economies.

The Chinese Ministry of Commerce responded in a statement early Thursday that it
has “serious concern” about the order and “reserves the right to take measures.”

The United States and China appear to be increasingly locked in a geopolitical
competition with a conflicting set of values. Biden administration officials
have insisted that they have no interest in “decoupling” from China, yet the
U.S. also has limited the export of advanced computer chips and kept the
expanded tariffs set up by President Donald Trump. And in its response, China
accused the U.S. of “using the cover of ‘risk reduction’ to carry out
‘decoupling and chain-breaking.’” China has engaged in crackdowns on foreign
companies.

Biden has suggested that China’s economy is struggling and its global ambitions
have been tempered as the U.S. has reenergized its alliances with Japan, South
Korea, Australia and the European Union. The administration consulted with
allies and industry in shaping the executive order.

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Biden issues an executive order restricting US investments in Chinese technology
President Joe Biden has signed an executive order to block and regulate
high-tech U.S.-based investments going toward China

“Worry about China, but don’t worry about China,” Biden told donors at a June
fundraising event in California.

The officials previewing the order said that China has exploited U.S.
investments to support the development of weapons and modernize its military.
The new limits were tailored not to disrupt China’s economy, but they would
complement the export controls on advanced computer chips from last year that
led to pushback by Chinese officials. The Treasury Department, which would
monitor the investments, will announce a proposed rulemaking with definitions
that would conform to the presidential order and go through a public comment
process.

The goals of the order would be to have investors notify the U.S. government
about certain types of transactions with China as well as to place prohibitions
on some investments. Officials said the order is focused on areas such as
private equity, venture capital and joint partnerships in which the investments
could possibly give countries of concern such as China additional knowledge and
military capabilities.

J. Philip Ludvigson, a lawyer and former Treasury official, said the order was
an initial framework that could be expanded over time.

“The executive order issued today really represents the start of a conversation
between the U.S. government and industry regarding the details of the ultimate
screening regime,” Ludvigson said. “While the executive order is limited
initially to semiconductors and microelectronics, quantum information
technologies, and artificial intelligence, it explicitly provides for a future
broadening to other sectors.”

The issue is also a bipartisan priority. In July by a vote of 91-6, the Senate
added as an amendment to the National Defense Authorization Act requirements to
monitor and limit investments in countries of concern, including China.

Yet reaction to Biden’s order on Wednesday showed a desire to push harder on
China. Rep. Raja Krishnamoorthi, D-Ill., said the order was an “essential step
forward,” but it “cannot be the final step.” Republican presidential candidate
Nikki Haley, a former U.S. ambassador to the United Nations, said Biden should
been more aggressive, saying, “we have to stop all U.S. investment in China’s
critical technology and military companies — period.”

Biden has called Chinese President Xi Jinping a “dictator” in the aftermath of
the U.S. shooting down a spy balloon from China that floated over the United
States. Taiwan’s status has been a source of tension, with Biden saying that
China had become coercive regarding its independence.

China has supported Russia after its 2022 invasion of Ukraine, though Biden has
noted that the friendship has not extended to the shipment of weapons.

The U.S. Chamber of Commerce said it met a number of times with the White House
and federal agencies as the order was being prepared and said its goal during
the comment period will be “to ensure the measure is targeted and
administrable.”

U.S. officials have long signaled the coming executive order on investing in
China, but it’s unclear whether financial markets will regard it as a tapered
step or a continued escalation of tensions at a fragile moment.

  

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