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Joe Biden issues an order prohibiting Chinese investment in US technologyYash Ranjan09/16/202214
President Joe Biden will sign an executive order on Thursday that will strengthen the federal government's ability to block Chinese investment in technology in the United States and limit the federal government's access to private data on citizens, according to administration officials, in a move that is certain to exacerbate tensions with Beijing. The new order is intended to concentrate the efforts of the covert Committee on Foreign Investments in the United States, which was established by Congress nearly 50 years ago. The committee's authority was essentially restricted for a long time to prohibiting foreign purchases of American companies that would have a direct impact on national security, like a military contractor. But the new directive instructs the CFIUS, or Committee on Foreign Investment in the United States, to focus on certain transactions that might grant foreign power access to crucial technologies that Biden has recognized as essential to American economic progress. The committee will look at situations that could affect "microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced renewable energy, and climate adaption technologies," according to a White House description. Although China is not expressly mentioned in the directive, all of them are crucial sectors of the "Made in China 2025" initiative, which President Xi Jinping launched seven years ago. These are also technologies in which the United States is currently investing more government funds. Since the objectives were excluded from a recent industrial policy bill passed by Congress that provided funding for important technology, Biden's directive has been anticipated for months. However, the directive does not address "outbound investment" by American businesses in other countries, even though it appears likely that the Biden administration would look for new legal means to address that issue as well. One worry has persisted for years: that for businesses to enter the Chinese market, China will demand that they hand over their technology. Nigel Inkster, a former director of operations and intelligence for Britain's Secret Intelligence Service, characterized covert operations by Chinese intelligence agents to acquire technology or manufacturing techniques that would hasten Beijing's progress in this week's opinion piece in The New York Times. "For China, this work is about survival," Inkster said. It mentions the fact that Chinese individuals are required by China's intelligence rules to assist intelligence organizations, usually covertly. In some ways, the presidential order formalizes a long-running, new, more expansive understanding of the committee's powers. According to White House officials, the CFIUS group's authorizing statutes, which date back to the group's formation in the Gerald Ford administration, do not need to be changed in response to Biden's directive to concentrate on essential technology. However, over the past seven or so years, the interagency group's authority has steadily grown, and it is now able to veto even a minority investment without purchasing a majority stake. This is due in part to concerns that Chinese state-owned companies may be setting up venture capital funds in Silicon Valley and other places to gain early access to new technologies. According to a White House statement, the new order will consider the technology itself rather than its size, including "advancements and applications in technology that could harm national security."