Biden issues an executive order restricting U.S. investments in Chinese technology

Biden admin. blocks, regulates U.S. investments in China tech, citing nat'l security. The order covers advanced computer chips, micro electronics, quantum info tech & AI. It seeks to blunt China's ability to use U.S. investments to upgrade its military, while preserving trade. U.S. & China increasingly locked in geopolitical competition, with Biden insisting no interest in “decoupling” but limiting exports & tariffs.

President Joe Biden signed an executive order on August 9 to block and regulate high-tech U.S.-based investments going toward China— a move the administration said was targeted even though it reflected an intensifying competition between the world's two biggest powers.

The order covers advanced computer chips, micro electronics, quantum information technologies and artificial intelligence. Senior administration officials said that the effort stemmed from national security goals rather than economic interests, and that the categories it covered were intentionally narrow in scope. The order seeks to blunt China's ability to use U.S. investments in its technology companies to upgrade its military while also preserving broader levels of trade that are vital for both nations' economies.

The United States and China appear to be increasingly locked in a geopolitical competition with a conflicting set of values. Biden administration officials have insisted that they have no interest in “decoupling” from China, yet the U.S. also has limited the export of advanced computer chips and kept the expanded tariffs set up by President Donald Trump. China has engaged in crackdowns on foreign companies.

Mr. Biden has suggested that China's economy is struggling and its global ambitions have been tempered as the U.S. has reenergized its alliances with Japan, South Korea, Australia and the European Union. The administration consulted with allies and industry in shaping the executive order.

“Worry about China, but don’t worry about China,” Mr. Biden told donors at a June fundraising event in California.

The officials previewing the order said that China has exploited U.S. investments to support the development of weapons and modernize its military. The new limits were tailored not to disrupt China's economy, but they would complement the export controls on advanced computer chips from last year that led to pushback by Chinese officials. The Treasury Department, which would monitor the investments, will announce a proposed rulemaking with definitions that would conform to the presidential order and go through a public comment process.

The goals of the order would be to have investors notify the U.S. government about certain types of transactions with China as well as to place prohibitions on some investments. Officials said the order is focused on areas such as private equity, venture capital and joint partnerships in which the investments could possibly give countries of concern such as China additional knowledge and military capabilities.