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Biden Administration to Impose Executive Order Restricting U.S. Investment in China’s High-Tech Sectors

The Biden administration is set to issue an executive order next week that will impose restrictions on U.S. investment in China’s high-tech sectors, including artificial intelligence, semiconductors, and quantum computing.

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The move comes as part of the administration’s efforts to limit China’s technological advancements and secure dominance in critical technologies.

The executive order will introduce a screening process for U.S. investments in China and will specifically target future investments in a limited number of sectors.

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U.S. Treasury Secretary Janet Yellen clarified that the restrictions would be narrowly focused and not broadly affect U.S. investment in China or the investment climate for China.

Despite the targeted approach, the tech and finance industries are expressing concerns about the potential implications of the order.

Some worry that it could lead to a rapid divestment from existing Chinese investments and create a chilling effect on cross-border investment activities in China.

Following the issuance of the executive order, there will be a review period to allow stakeholders to provide feedback on its implementation.

As the order has been anticipated for months, companies have had time to prepare, potentially resulting in less pushback on the final version.

Tech-related tensions between the U.S. and China have been escalating, particularly in the field of artificial intelligence, where both countries are making significant advances.

The U.S. has already implemented export bans to restrict certain Chinese companies’ access to advanced AI chips and equipment.

In response, China has imposed export controls on metals used in semiconductors and announced a ban on certain drone-related equipment exports.

The upcoming executive order is likely to face opposition from China and Biden’s opponents in Washington.

Representative Mike Gallagher has urged the White House to broaden the scope of the order to address issues related to the People’s Liberation Army (PLA), human rights abuses, techno-totalitarian surveillance, and critical supply chain dependencies with China..

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