Biden signs new act to curb China investment; closed mindset will harm US industry: analyst
Published: Sep 16, 2022 11:57 PM
Illustration: Chen Xia/Global Times

Illustration: Chen Xia/Global Times

US President Joe Biden on Thursday signed an executive order to strengthen a review of foreign investment in sectors involving sensitive data and cyber security, another move targeting China amid Washington's increasing pressure on Chinese tech development.

Observers said the latest order, combined with a series of "decoupling" policies toward China recently, is not too surprising, but it demonstrates the dangerous and closed mindset of the world's largest economy. The move will only impede US technological advancement, they said.

The order directs the Committee on Foreign Investment in the US (CFIUS) to further scrutinize foreign investments and transactions related to areas such as sensitive data and artificial intelligence. A particular concern cited is the security of supply chains and whether an investment might give a foreign entity control of critical manufacturing capabilities, mineral resources or technologies, according to media reports.

The CFIUS, led by the US Treasury Department and including top officials such as those from the Justice Department and Homeland Security, investigates acquisitions involving foreign companies that may pose national security risks.

While the order doesn't single out China by name, an explanation of the measures provided by the White House said targets are "particularly those from competitors or adversarial nations."

Through the CFIUS, the US can even review past investments to see which ones do not meet the regulations, and then use other methods, even domestic laws, to hype the so-called risks of companies' investment, Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Friday.

On the surface, it is aimed at all countries, but in fact it is aimed at China, Gao said, predicting that the US may soon include other industries including public health technology, agricultural technology, and energy technology into the review area.

According to the White House, the order is the first action of its kind to instruct the CFIUS on specific risks to consider throughout the formal review process since it was established in 1975.

Since 2021, China's investment in the US has dropped sharply, because the US pursues so-called absolute security and decouples this concept from development, Gao said, adding that this closed mindset will only harm US industry.

Gao further noted that the move will greatly impede convenience for foreign investors in the US and will backfire on the US itself.

"The policy will also raise costs for both producers and consumers in the US, where the inflation rate is already high," Gao said.

The move comes as Washington has been mulling broader curbs on the Chinese tech sector to further decouple from China.

The latest two fields for scrutiny are chip and medicine supply chains. The Biden administration is planning to broaden curbs on US shipments to China of semiconductors used for artificial intelligence and chip-making tools, Reuters reported on Monday, citing several people familiar with the matter without revealing their names.

The administration is also reportedly planning to sign an executive order to boost US bio-manufacturing to compete with China.