Biden administration working on new rules for investment in China

Picture: WSJ

The United States administration under President Biden is planning to introduce a new program that may restrict American investment in certain sectors in China, in an attempt to safeguard the country's technological advantages in the face of increasing competition from the world's second-largest economy.

In reports submitted to lawmakers on Capitol Hill, the Treasury and Commerce departments indicated that they are evaluating a regulatory system to address investment in foreign advanced technologies that pose national security risks.

While the reports did not specify which technology sectors pose a risk, they did indicate that the program will focus on sectors that could advance the military capabilities of rivals.

Individuals familiar with the program suggest that it may encompass private-equity and venture-capital investments in advanced semiconductors, quantum computing, and certain types of artificial intelligence, in an effort to prevent American investors from providing funding and expertise to Chinese companies that could enhance the speed and accuracy of Beijing's military decision-making.

The Treasury report specified that the program would aim to prevent the exploitation of US capital and expertise in a manner that endangers national security, without unfairly burdening US investors and businesses. Although the reports do not name the countries that would be subject to the new regulations, insiders claim that the administration's efforts to develop the rules will likely be focused on US investments in China.