U.S. News: Biden Weighs Order to Screen Tech Investment in China

"WASHINGTON -- The Biden administration is weighing an executive order to screen and possibly restrict U.S. overseas investment in cutting-edge technology development in China and other potentially hostile countries.

The White House is aiming to issue such an order within the next couple of months to monitor and potentially block outbound investment by American companies and investors, according to people familiar with the matter.

The initiative follows a failed attempt to pass legislation that would have imposed similar restrictions but was dropped from a package aimed at boosting U.S. competitiveness this summer.

The White House's National Security Council declined to comment.

The new effort, as with the legislative proposal before it, is drawing concern from some U.S. tech businesses and investors, who said such a move may prove unwieldy or overbroad and undercut U.S. economic influence.

"Keeping this scheme focused on the crown jewels of U.S. tech is imperative," said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce. "A too-broad approach would stress limited U.S. government resources and could punish U.S. workers and companies."

No matter what the U.S. does, Mr. Murphy said, targeted countries likely could continue to source many technologies from other countries.

The effort also could face legal hurdles, some of the people familiar with the matter said.

The idea for the executive order stems from growing concern among some officials and policy makers that U.S. investment in China could help Beijing achieve its goal to dominate strategically important sectors -- particularly semiconductors, but also areas such as artificial intelligence and quantum computing.

"It is weird to see U.S. financial firms underwriting Chinese chip makers, something that would be good to stop," said James Lewis, director of the technology and public policy program at the Center for Strategic and International Studies, a Washington think tank.

Over the past few years, lawmakers tried to craft legislation to impose such restrictions.

An early version of the legislation became a target for business lobbyists, who argued it was too broad and would have unduly restricted international commerce.

A narrower version that emerged over the summer focused more on curbing U.S. investment in sectors that were crucial to supply chains or involved critical and emerging technologies, such as semiconductors, large-capacity batteries, biotechnology, hypersonics, financial technologies and autonomous-driving systems.

That proposal eventually was dropped from the broader competitiveness legislation this summer, amid some industry criticism and as lawmakers rushed to complete work on the sprawling, long-delayed package.

The U.S. has for decades regulated foreign investment in U.S. entities, and limited American companies' exports of sensitive technologies abroad for national security. The executive order -- like the legislation under consideration this summer -- would expand the federal government's purview over Americans' investment activities overseas.

The push to more closely regulate U.S. business activity abroad reflects a growing perception in Washington that China aims to supplant U.S. global leadership and that American capital and expertise are aiding the buildup of Chinese military and economic power.

The Chinese Embassy in Washington said Beijing opposes the order, adding that the measure would limit normal investment in China, disrupt international trade and distort global semiconductor supply chains.

"The U.S. politicizes, instrumentalizes and weaponizes tech and trade issues, and engages in tech blockade and decoupling in an attempt to monopolize the world's advanced technologies, perpetuate its hegemony in the sci-tech sector and damage the closely-knit global industrial and supply chains," embassy spokesman Liu Pengyu said in a statement.

Administration officials continue to discuss which agency would lead the new effort, as well as how far its authority might extend.

Possibilities include the Treasury Department, which leads U.S. oversight of inbound investments, as well as the Commerce Department and the Defense Department. The Commerce Department declined to comment. The Treasury and Defense Department didn't respond to requests for comment.” [1]

1.  U.S. News: Biden Weighs Order to Screen Tech Investment in China
McKinnon, John D. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 09 Sep 2022: A.4.