Biden administration comes out with new rules for US investment in China; say reports

In a bid to safe guard US technology advantages, Biden Administration is preparing a new bill that could prohibit US investment in certain areas in China. This more by US comes amid the escalating tensions and growing competition between the nations.

US preparing new program to prohibit investments in certrain areas of China

Media reports have revealed that lawmakers on Capitol Hill, the US Treasury and Commerce Departments were considering a new regulatory system , which would address US investment in advanced technologies abroad that could pose national security threats to the US.

Further the reports have stated that the US Government might prohibit some investments while also potentially collecting information about other investments to inform future steps, however reports do not mention specific technology sectors that Biden administration would consider risky and detrimental to US efforts. The report is clear on the fact that that sectors that could advance rivals military capabilities would be the prime focus of the program.

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Restricted Sectors for US Investment in China

The program is expected to cover private equity and venture capital in below sectors

• Investments in advanced semiconductors
• Quantum Computing
• Artificial Intelligence

US official are very clear that they would want American investors from providing funding and expertise to Chinese companies that could improve the speed and accuracy of China’s military decisions.

Focus of the program

As per US Treasury Department, the program would focus on:

“preventing US capital and expertise from being exploited in ways that threaten our national security while not placing an undue burden on U.S. investors and businesses,"

New rules has been tailor made to deal with US investments in China and the reports have not mentioned the names of countries that would be placed under the new purported rules.

The two lead US agencies the US Treasury Department and Commerce departments have stated that they will finalize the policy on the issue in near future and are expected to seek additional resources for the investment program in the White House budget which is due to be released next week.

The report is an attempt by Biden Administration in impacting China’s ability to create technologies that US officials think could pose a national security risk and the new program will also be subject to public comment and the Treasury Department would administer with the Commerce Department.

US Government has been working proactively on an executive order to establish new investments rules for months. In 2022, US government had announced export restrictions on advanced semiconductors and chip manufacturing aimed at slowing china’s military advance.

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