US president Joe Biden has moved to ban US investment in multiple key Chinese sectors, as Washington looks to restrict Chinese access to technologies such as artificial intelligence (AI) and semi-conductors.
Biden signed an executive order yesterday (9 August) seeking to prevent “foreign countries of concern” from taking advantage of US investment in technologies which the US sees as critical to its national security.
Consultation
The order is going through a consultation process before it will be implemented, with the US Treasury currently seeking views from industry before publishing the draft rules.
China, including Hong Kong and Macau, was named as a “country of concern” in an annex to the order.
The three named sectors are: semiconductors and microelectronics, quantum information technologies and artificial intelligence.
‘Long overdue’
Republican senator Marco Rubio said the rules were “long overdue” but that the “narrowly tailored proposal is almost laughable”, alleging it was “riddled with loopholes”.
A Chinese foreign ministry spokesman said that Beijing “strongly deplores and firmly opposes the US’s single-minded rollout of restrictions on investments in China.”
Notification ‘preferred’
The order also contains an outbound investment programme through which the US government would need to be notified of various technology investments.
The White House emphasised that it wanted to prevent investment in only “the most acute” areas, with notification being the preferred option in most cases.
The US already has restrictions on the sale of certain technologies to China, notably that of semi-conductors, so the expansion of the scheme is seen by some as a way to prevent China growing its own industry.
Due diligence
Roger Arthey, chair of the Institute of Export & International Trade (IOE&IT)’s Export Control Profession Board, said:
“This announcement could affect businesses in the UK and elsewhere involved in the use, design and manufacture of the affected technologies, especially those with known US content.
“Such businesses should review all technology and products received from the US and ensure that they are complying with the conditions of any US export authorisations, both military and dual-use.
“If they are uncertain about how the conditions apply to them, the first port of call would be the original US licensee, who can explain the current conditions and advise on any changes.
“Affected businesses should also be alert for any regulatory changes from the UK and EU.”
Hamish Mackay, a trade and customs specialist at IOE&IT, said that the move made it “more important than ever” for UK traders to carry out full due diligence when exporting goods.
He said: “We are already aware that there are risks associated with exporting any controlled or deemed dual-use goods to China, but this adds another level of complexity to doing business in China, especially if products being exported from the UK have any US content.”
Sunak weighs response
The FT reports that prime minister Rishi Sunak is consulting businesses before deciding whether or not to follow Biden’s move.
A government spokesman said the order gave “important clarity on the US approach” and said that they would study the order before responding.
Sunak signed the Atlantic Declaration with Biden in June which aimed to strengthen ties between the US and UK. Sunak also declared the “golden age” of British-Sino relations “over” in his first major foreign policy speech as PM.
However, foreign secretary James Cleverly has previous urged for a more constructive relationship, arguing that isolating China would be against the UK’s national interests.
