Sensitive future technology
Biden regulates US investments in Chinese technologies
The decree by US President Joe Biden is aimed at “questionable countries” – although only China is expressly mentioned. photo
© Alex Brandon/AP/dpa
The US is concerned that China will upgrade the defense sector with the help of US investments. Washington fears national security will be undermined. The US President wants to prevent that.
“We want to prevent China from acquiring and using the most advanced technologies to advance military modernization and undermine US national security,” a US government official said. Biden issued a corresponding decree on Wednesday (local time).
Beijing wants to fight back
China wants to defend itself against the announced restrictions. The state broadcaster CCTV quoted a spokesman for the Ministry of Foreign Affairs as saying that the situation would be closely monitored and “its own rights and interests resolutely defended”. The aim of the Americans is to deprive China of its rights and maintain global dominance of the United States, it said. The procedure violates the principles of the market economy and fair competition.
The US government representative emphasized that these were selective measures to protect national security and not a fundamental brake on investment. The third area affected is quantum computers, which are believed to be many times more capable of surpassing the capabilities of today’s computers.
US investments in China could be banned in the future
US investments in the sectors in China could be banned by the government in the future after examination. In some cases there should be a reporting obligation. The US Treasury Department wants to work out details after a consultation process lasting several weeks.
Among other things, China needs chips from the market leader Nvidia for systems with artificial intelligence. Chinese companies order Nvidia technology worth billions.
The US is already restricting Chinese access to American technologies. The smartphone provider and network supplier Huawei can use neither modern chips nor Google services. The lock threw Huawei out of the international smartphone market.
Decree aimed at “questionable countries”
Biden’s decree is aimed at “questionable countries” – although only China is expressly mentioned. The core issue is to ensure that capital from the United States does not flow into industrial sectors of rival countries on a large scale that are important to the national security of the United States – for example in the defense or technology sectors.
The goal is also that existing export controls would not be undermined, said the US government representative. It is not about stopping the flow of money to China in general. “China doesn’t need our money. (…) What they don’t have is knowledge.” The scheme follows a similar mechanism used to pre-screen large foreign investments in the US.
A regulation of foreign investments has been discussed in the USA for some time. However, there was some controversy over whether additional restrictions could harm the USA economically, since so many products for Americans are manufactured in China.
Examination of a “similar program” also in Germany?
At the most recent summit of the G7 countries in May in Hiroshima, Japan, the USA and its partners also discussed the topic, but only made very vague agreements on it. The US official said: “Some allies such as the European Commission, the United Kingdom and Germany have announced that they will consider developing similar programs of their own.”
US-China relations have been at rock bottom for some time. Biden left in place the punitive tariffs against China introduced by his predecessor Donald Trump. The Democrat also initiated large-scale investments in the US to make America’s supply chains more independent – especially from China. China’s tolerance for Russia’s war in Ukraine and threats against Taiwan, as well as spy balloons that crossed the United States, also caused controversy. Beijing restricted the export of metals like gallium, which are also important for the US defense industry.