President Joe Biden signed a long-awaited executive order on Wednesday that will limit US investment in China’s high-tech industry.
The White House said the prohibitions were not intended to separate the US-China interdependent economies, but rather were meant to protect national security goals.
The president told Congress in a letter that he was declaring a national emergency to deal with the rising threat posed by China and similar nations “in sensitive technologies and products critical to the military, intelligence, surveillance or cyber-enabled capabilities.”
The order authorizes Treasury Secretary Janet Yellen to prohibit in some cases, and restrict in others, investment by US firms in Chinese firms that produce semiconductors and microelectronics, quantum information technologies and certain artificial intelligence (AI) systems.
Biden said he aims to prevent further Chinese hijacking of American expertise that could undermine US national security by indirectly supporting China’s military development.
The measure targets private equity, venture capital, joint ventures and greenfield investments, Reuters reported.
In response, the Chinese Commerce Ministry said in a statement on Thursday that Beijing is “gravely concerned” about the order, which the ministry said undermines the international economic and trade order.
The statement also expressed the hope the US would refrain from “artificially hindering global economic and trade exchanges and cooperation or set up obstacles for the recovery of the world economy.”
The Chinese foreign ministry said Beijing was “strongly dissatisfied” and “resolutely opposes the US’s insistence on introducing investment restrictions on China.”
There appears to be bipartisan support for the order; last month the Senate voted 91-6 to approve an amendment to the National Defense Authorization Act with requirements to monitor and limit investments in “countries of concern,” including China.
Senate Democrats applauded the move.
“For too long, American money has helped fuel the Chinese military’s rise,” Democratic Senate Majority Leader Chuck Schumer (D-NY) said in a statement. “Today the United States is taking a strategic first step to ensure American investment does not go to fund Chinese military advancement.”
Republicans were less pleased, saying the order did not go far enough.
GOP Senator Marco Rubio said the plan was “riddled with loopholes, explicitly ignores the dual-use nature of important technologies and fails to include industries that China’s government deems critical.”
More than 70,000 US firms do business in China, according to a spokesperson for the Chinese Embassy in Washington.