An executive order signed by President Biden forbids American citizens from making investments in specific Chinese enterprises. After a year in which the leaders of the two countries with the two greatest economies in the globe have been engaged in a frequently acrimonious back and forth, the long-awaited effort’s details are certain to further sour relations between Washington and Beijing.
The measures unveiled on Wednesday seek to prevent American cash from being invested in quantum computing, specific semiconductor, and artificial intelligence businesses based in China or under Chinese government control in the upcoming months. The subsequent action is a review phase, which might extend for at least a few months. The proposed rules won’t take effect right away.
A National Security Action
But if the suggestion is implemented as it is now, the regulations will demand that several financial dealings be approved with the US administration first. The Treasury Department will rigorously monitor some transactions while prohibiting others. The limitations, according to White House officials, are necessary because China is actively working with specific companies to build innovative technologies for military purposes.
A senior official from the administration who described the intentions in detail insisted that it was a national security action rather than an economic one. According to this person, the steps will be planned to be as specifically targeted as possible with the intention of only affecting military applications rather than China’s entire economy. Though the order “is a major blow” to the overall Chinese startup ecosystem and American attempts to be engaged with those companies, irrespective of whether their products have got military applications, venture capitalist Edith Yeung, a general partner at Race Capital, told Yahoo Finance that the economic effects could be felt widely.
Intangible Benefits Of The Investments
Investments in the most cutting-edge semiconductors available today in addition to AI systems with military applications are directly targeted by the laws. But for the time being, there are still numerous questions about where Biden would draw the line regarding which kinds of transactions are permitted and which will be prohibited. The guidelines may change during the upcoming public review procedure, which will solicit feedback from both private businesses and G7 allies, according to White House officials.
Both the actual funds and what officials refer to as the intangible advantages of those investments, including improved standing as well as access to particular talent networks, are intended to be choked off by the limitations. In the previous year, the Department of Commerce imposed export control regulations for China, which the new regulations unveiled on Wednesday are intended to work in tandem with.
