Biden administration reins in public checks ahead of presidential election… Specification of export and investment controls
Effective from January 2 next year… White House: Block China‘s contribution to military modernization
On the 28th (local time), the U.S. Joe Biden administration announced rules to control U.S. investment in China related to advanced technologies such as semiconductors, quantum computing, and artificial intelligence (AI). It is interpreted as an attempt to tighten the reins on China to suppress China’s acquisition of cutting-edge technology ahead of the US presidential election.
On this day, the U.S. Treasury Department announced a final rule restricting Chinese investment in areas of concern, such as semiconductors, microelectronics technology, quantum computing, and AI.
According to the final rule, which will take effect on January 2 next year, ‘US persons’ investors must report their investment plans to the Treasury Department before investing in the high-tech sector in China (including Hong Kong and Macau).
Previously, President Biden signed an executive order restricting U.S. investment in China’s high-tech sector in August last year, and the Treasury Department announced a rulemaking specifying this in June and has been collecting opinions.
The White House has made clear that the goal of the rule is to prevent U.S. investments from contributing to advances in key technologies that help China’s military modernization. “Cross-border investment flows and America’s open investment policy contribute to the vitality of the American economy, but countries of concern are exploiting certain American foreign investments in ways that accelerate the development of sensitive technologies and products that undermine America’s national security interests,” the White House said. “We are doing it,” he said.
“The final rule takes targeted and practical steps to ensure that U.S. investments are not misused to advance the development of critical technologies that threaten our national security,” said Paul Rosen, Treasury Assistant Secretary for Investment and Security Affairs. Assistant Secretary Rosen added, “AI, semiconductor, and quantum technologies are foundational technologies for the development of next-generation military, surveillance, intelligence, and specific cybersecurity applications, such as advanced decryption computer systems and next-generation fighter jets.” A senior Biden administration official said that there have been extensive discussions with allies and partners, including the G7, regarding investment restrictions. It is expected that voices calling for similar restrictions on investment in China to be introduced in major U.S. allies, such as Korea, will grow.
This final rule broadly governs investments in technologies related to advanced semiconductor design, manufacturing, and packaging, as well as the development of quantum computing and AI systems. However, the Ministry of Finance announced in the final rule announced today that exceptions will be recognized in cases where less than $2 million (approximately KRW 2.8 billion) is invested in publicly traded securities, some funds issued by registered investment companies, and venture capital funds.
