The US government has not just been reviewing foreign investments in China since yesterday. In some sensitive cases, such investments have even been prohibited. In order to prevent a possible transfer of sensitive technology, a new set of rules should soon take effect.
After Chinese investments domestically, the US government now also wants to target US investments in China in order to prevent the possible transfer of sensitive technologies. The Treasury and Commerce Departments are working on a new rulebook to ban US investments abroad in advanced technologies that could pose a risk to national security. This emerges from reports from both ministries, which were made available to members of Congress and copies of which could be viewed by the "Wall Street Journal".
Accordingly, the US government could ban certain investments directly, while for others it might first require information in order to determine future steps on this basis.
The reports do not identify specific technology sectors that the Biden administration considers risky to its own security. However, sectors that could improve the military capabilities of rivals would be a focus of the program. Countries that should be the target of the new rules are not explicitly named in the reports. However, insiders said the real deal is likely to be US investment in China.
Insiders believe the regulation will cover private equity and venture capital investments in advanced semiconductors, quantum computing and some forms of artificial intelligence. They want to prevent American investors from providing Chinese companies with funding and expertise that could, for example, improve the speed and accuracy of Beijing's military decisions. According to the reports, the program should be completed in the near future.
The US government has long scrutinized foreign investment. In some sensitive cases, such investments were also prohibited by the CFIUS authority set up for this purpose. However, rules governing US investments abroad would be a new step in restricting China's ability to develop technologies that the US believes could pose a risk to national security. Last year, the US imposed new export restrictions on advanced semiconductors and chip-making equipment to stem China's military advance.
