As the tech war between the world’s two largest economies intensifies, the US Congress on Tuesday considered new ways to restrict US investment in China involving sensitive technology.
A hearing by the House Financial Services Subcommittee on National Security, Illegal Finance, and International Financial Institutions revealed that U.S. private equity and venture capital investments are focused on four Chinese technology areas: artificial intelligence, quantum computing, and semiconductors. The move follows U.S. President Joe Biden’s executive order in August banning foreigners from entering the country. and microelectronics.
Rep. Blaine Lutkemeyer, R-Missouri, who chairs the subcommittee, said Biden’s order is “a step in the right direction, but could be improved through more permanent legislative action.” ” he said.
“While there may be different approaches, there is strong bipartisan, bicameral support for a foreign investment review,” said Rep. Joyce Beatty, D-Ohio.
The hearing, “Improving Investment Barriers: Exploring Alternatives to Tightening Chinese Communist Party Sanctions and Bureaucracy,” considered additional ideas for legislation to prevent U.S. funds from strengthening China’s technological and military sectors. .
Three major bills have been introduced in Congress that would ban nearly all economic interactions with Chinese companies critical to China’s defense and surveillance technology sectors, including one by Kentucky Republican Rep. Andy Barr.
Another House bill, filed by Rep. Michael McCaul (R-Texas) and Rep. Gregory Meeks (D-New York), would expand restricted technology areas to include hypersonics and high-performance computing. By doing so, it seeks to build on Biden’s order.
And the Senate introduced the Foreign Investment Transparency Act, which would require U.S. companies to notify the Treasury Department before making investments in certain sectors.
US requires Big Tech AI providers to disclose foreign customers
US requires Big Tech AI providers to disclose foreign customers
Witnesses at Tuesday’s hearing urged lawmakers to leverage existing authorities, including the U.S. government’s current export control list, to avoid the extra work of creating a new mechanism.
“Establishing a uniform definition of “critical technology” and rooting that definition in a clearly defined export control list, such as the Commerce Control List or the U.S. Munitions List, allows regulators to target specific threats. We now have a clear, concrete and updatable mechanism for this,” said Richard. Mr. Asho is vice president of Lam Research Corporation, a supplier to the semiconductor industry.
“Creating a new foreign investment authority, whether it’s a vetting mechanism or a sector-like system, is a mistake,” said Thomas Fed, founder of national security consultancy Rubicon Advisors.
“It is my strong view that the existing authorities provide the best means of addressing the gaps that have been asserted since the policy debate on foreign investment regulation began,” Fed said. He proposed combining both House bills to create a sanctions-based approach that applies existing export control lists.
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Biden to introduce new restrictions on US investment in China, declares technology sector ‘state of emergency’
Biden to introduce new restrictions on US investment in China, declares technology sector ‘state of emergency’
The proposal follows other similar measures that would strengthen the legislature’s ability to assert some control over Biden’s China policy.
Other times, for example, the current Congress has been criticized for failing to introduce legislation, even though it moved quickly last year to force the Biden administration to submit to its authority regarding economic relations with Taiwan.
The U.S.-Taiwan Initiative on the 21st Century Trade Preferences Agreement Implementation Act was announced by the Senate Finance Committee and the House Ways and Means Committee in June. It passed the House that same month and the Senate in July.
Biden signed it weeks later, effectively giving Congress power over the deal the White House negotiates with Taipei.