Biden BANS 100% of US investment in Chinese quantum computing, chip development and AI

H Hannan

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Biden BANS 100% of US investment in Chinese quantum computing, chip development and AI
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President Joe Biden has issued an executive order barring all US citizens, residents and corporations from any financial transactions with Chinese-owned Companies working on semiconductors, quantum computing or AI.

On Wednesday the White House announced a new order stopping any “US persons” from “undertaking particular transactions involving certain entities located in or subject to the jurisdiction of a country of concern, and certain other entities owned by persons of a country of concern, engaged in activities related to defined sub-sets of technologies and products”. The order also includes that it must be reported if a persons is “engaged in activities related to other defined technologies and products”.

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In the order, Mr. Biden states that “countries of concern” are currently “engaged in comprehensive, long-term strategies that direct, facilitate, or otherwise support advancements in sensitive technologies and products that are critical to such countries’ military, intelligence, surveillance, or cyber-enabled capabilities”. He also noted that the order was put in place to “eliminate barriers between civilian and commercial sectors and military and defence industrial sectors, not just through research and development, but also by acquiring and diverting the world’s cutting-edge technologies, such as quantum computing, semiconducting chips and AI, for the purposes of achieving military dominance”.

President Biden recently issued an executive order imposing major new restrictions on American investment in Chinese technology companies.

In the order, Biden designated China, Hong Kong, and Macau as “countries of concern” when it comes to acquiring certain sensitive technologies. He argues that advancements in key tech sectors like semiconductors, AI, and quantum computing could give China military and intelligence advantages that pose national security risks to the US.

To deal with this threat, Biden is banning US investment in specific categories of sensitive technologies coming out of China. The restricted tech includes semiconductors, AI, and quantum information systems. The Treasury Department will further refine the list of banned technologies in consultation with other agencies.

Biden justified the move by declaring a new national emergency under the International Emergency Economic Powers Act. This allows him to impose investment restrictions to counter the threat from China potentially exploiting US investments in sensitive tech.

The new rules are narrowly targeted at the most sensitive emerging technologies, according to the Treasury Department. There will likely be exceptions for things like publicly traded stocks and transfers within US companies.

The Biden administration’s new ban on American investments in certain sensitive Chinese technology companies signifies an escalation in efforts to halt China’s military modernization. The investment restrictions come amid a chorus of bipartisan voices in Congress urging action to curb China’s exploitation of cutting-edge US technologies with defense applications. Chinese officials will likely oppose the move, however, as President Biden concurrently champions major investments to advance US semiconductor manufacturing and artificial intelligence capabilities.

The investment prohibition aims to block American capital flows toward strengthening China’s military apparatus and global power projection capabilities. However, the administration emphasizes the newly announced restrictions are narrowly targeted at sectors directly enabling advancements in quantum computing, advanced semiconductors, and artificial intelligence. These technologies were chosen based on their clear contributions toward bolstering Chinese military, surveillance, and cyber capacities posing national security threats to the US.

By focusing prohibitions solely on capital flows to enumerated sensitive technology areas rather than general investment restrictions, the administration contends it preserves the United States’ longstanding commitment to open investment environments. The ban’s precise aim is to deny China reciprocal access to instrumental technologies pioneered through decades of American innovation and R&D funding. However, non-sensitive sectors of mutual economic benefit remain unaffected by the directive.

Chinese officials will likely protest the investment ban as excessive given it may deter even civilian investment across targeted industries. Some may characterize the unilateral restrictions as contrary to the principles of free trade and open markets. But proponents insist limiting technology transfer to the Chinese military represents judicious self-protection, not trade hostility.

On the heels of the ban, President Biden trumpeted over $50 billion in new US investments to energize domestic chip manufacturing and expand American AI and quantum research. By catalyzing homegrown technology development, the administration hopes to deny China the opportunity to simply acquire American breakthroughs by restricting access.

In summary, the Biden administration believes barring American capital flows to sectors directly fueling China’s military modernization strikes the right balance between national security vigilance and international investment freedom. But China will undoubtedly oppose this latest move in an increasingly high-stakes technology standoff holding global security implications.

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