Be vigilant! Allies in the "heart wrenching battle" behind the US investment restrictions on China | Investment | Restrictions

In recent days, Tan Zhu has exclusively exposed foreign forces. Many media outlets cited a keyword from the article during the reprint, "Heart Attack.". The United States is engaged in a "heart to heart battle" against China in various fields, with the economic offensive being particularly prominent.

Tan Zhu used big data methods to mine the statements of so-called "insiders" specifically used by the United States to release information on China. We have found that since the beginning of this year, there has been an issue that the United States has been manipulating every month, which is the "Chinese economy.".

Economic behavior, whether it is consumption or investment, is influenced by expectations. However, this characteristic has precisely become a weapon for the United States to influence cognition and attempt to undermine China's economic expectations and confidence.

Recently, the United States has taken new actions. US President Biden has signed an executive order to establish an outward investment review mechanism to restrict US companies from investing in China's semiconductor and microelectronics, quantum information technology, and artificial intelligence fields.

According to the content of the administrative order, the specific measures of this review mechanism will be implemented and are expected to be implemented until next year. But even before this executive order was issued, the United States had to report extensively on the news of investment restrictions on China almost every month. From foreign media to domestic media, reports are still filled with unprecedented descriptions.

The United States deliberately creates an atmosphere of "mountains and rain approaching", with the intention of "killing two birds with one sword" behind it: boldly predicting the risks that American companies and allies will face when investing in China, while at the same time creating panic for the Chinese people.

This kind of heart wrenching technique is more worthy of vigilance than investment restrictions themselves.

01 Seeing things makes a difference

In fact, the Biden administration has been considering investment restrictions on China since 2022. However, through the changes in the number of relevant reports in the United States, it is not difficult to see that investment restrictions on China began to become a hot topic in media coverage in February, March, May, and July of this year.

Since the United States has been brewing, why has it become hotly discussed at these nodes?

Let's take a look at the two time periods of mid to late March and mid July, and at the same time, two things happened:

Starting from mid March, American corporate executives have sparked a "visit to China fever", including high-tech companies like Apple;

From July 6th to 9th, US Treasury Secretary Yellen visited China.

Is it just a coincidence that the restrictions on investment in China during these two critical moments coincide with the two lines of action of American private and official exchanges with China?

Not so. In fact, there have been significant internal disagreements in the United States regarding investment restrictions on China.

In order to overcome obstacles as soon as possible and push for the implementation of measures, in March this year, security officials led by US President's National Security Assistant Sullivan were vigorously pushing Biden to sign an executive order, but faced opposition from the Treasury and Commerce departments.

At the same time, American media began to hype up "investment restrictions on China" and emphasized in their reports that the scale of investment restrictions on China would be "unprecedented.".

The US media, on the other hand, is stepping on the node of encrypted communication between US companies and China to release messages, in order to first transmit the "cold air" to US companies - creating a momentum of imperative investment restrictions, predicting the potential risks of censorship for future investments in China in advance, and putting pressure on US companies unwilling to leave the Chinese market, so that they have psychological preparation and early planning.

It should be noted that American companies investing in China have always been highly sensitive to so-called investment restrictions on China.

A report from the American Chamber of Commerce in China this year showed that 66% of surveyed American companies stated that "increasingly tense US China relations" are the primary challenge. Previous reports have also shown that this concern is even greater in the technology and resource industries, with over two-thirds of surveyed companies considering it the primary challenge.

Under pressure, if the confidence of American companies is shaken, it will inevitably be transmitted back to the US Treasury and Commerce departments, interfering with their positions and decisions.

However, the "heart to heart battle" at this stage did not lead to a quick and decisive tug of war among all parties, and the US Treasury Department still firmly opposes it.

Sullivan wants to list as many areas as possible that pose a threat to national security, while Yellen wants to be more targeted and avoid having a widespread impact on American companies' investments in China.

In the initial version proposed by Sullivan, investment restrictions covered areas such as chips, artificial intelligence, quantum computing, biotechnology, and clean energy.

In the latest version, only three are left: chips, artificial intelligence, and quantum computing.

The two areas that the Ministry of Finance insists on removing, the depth of cooperation between China and the United States, and the consequences are difficult to estimate.

China and the United States are the two largest clean energy investors in the world. At the beginning of this year, well-known American automaker Ford announced a partnership with Chinese companies, investing at least $3.5 billion to seek new energy battery technology cooperation with China.

The tug of war among American decision-makers lasted until July, when Yellen began his visit to China. During the meeting with the Chinese side, Yellen stated that the US does not seek to "decouple and break the chain" and has no intention of hindering China's modernization process.

The direction of public opinion in the United States immediately changed. Previously, the US media, which had been portraying unprecedented investment restrictions, suddenly changed their tone and specifically highlighted a sentence from Yellen's release of information that "targeted narrowing of the scope of investment restrictions" to amplify the report, making this urgent administrative order appear "mild".

Until August 9th, this tug of war ended with the landing of investment restrictions. Tan Zhu also noticed a new detail in American media reports: the specific measures of investment review will not take effect immediately.

Professor Cui Fan from the University of International Business and Economics carefully studied the text content of the executive order and relevant documents of the US Treasury Department at the first time. He explained to Mr. Tan that the executive order authorized the US Treasury Department to take the lead in formulating specific rules. On the day of the executive order, the US Treasury Department had already published the key points of its own specific rules and solicited public opinion. Within 45 days, it accepted preliminary evaluation and will then release a formal rule proposal after multiple rounds of evaluation. The implementation time of the entire measure is expected to be until next year, during which there may be variables in the details of the relevant rules.

Obviously, although the Treasury team was unable to prevent the introduction of investment restrictions, they are still trying their best to mend the gap and reduce the losses of the United States itself.

This detail exposed the United States' "mind attack", first playing with the rhetoric of "exaggerating risks to the extreme" in an attempt to unify internal consensus; Then "give some psychological comfort" to weaken the harmful impact on oneself after the administrative order is issued.

02 Concept exchange

The issuance of this investment executive order not only aims to unify the consensus of various internal government departments and enterprises, but also hopes to receive support from allies externally.

Some American officials have said they hope that once Washington takes the lead, other countries will take action. Because without the support of allies, US executive orders may only restrict American companies from investing on their own, and instead allow allied companies to take advantage of the situation and earn profits.

The National Committee on US China Trade issued a statement after the executive order was issued, stating that it hopes the government can make more progress with US allies to prevent US unilateral policies from being detrimental to competition between US companies and foreign competitors.

Weakening one's own competitiveness is clearly not what the Biden administration wants to see. So, the Biden administration has put in a lot of effort to persuade allied countries to establish a joint investment review mechanism.

This joint review plan was originally planned to be launched around the G7 conference in Hiroshima, Japan in May this year. May was also one of the peak periods for the Biden administration to hype up investment restrictions.

Prior to the G7 meeting, the Biden administration almost bluntly stated that the United States is considering restrictions on China's investment and hopes to carefully study this matter with allies to reach a consensus and maximize the effectiveness of the restrictions.

How can we win the support of our allies? On a cognitive level, the United States has also come up with a trick - to subtly establish a cognitive consensus among everyone, and then guide everyone to adopt common investment restriction measures.

Since the beginning of this year, the United States has been using a new concept of "risk reduction" when expressing its economic and trade relations with China.

However, this word was first put forward by the President of the European Commission, von der Leyen. At that time, the context of von der Leyen's words was that Europe was in deep trouble in economic security due to the Russia-Ukraine conflict, financial risks and other external factors in the past.

Sullivan not only copied von der Leyen's "new words" immediately, but also expressed his recognition of von der Leyen in his speech on China policy. In Sullivan's speech, the so-called "risk reduction" by the United States directly pointed to the threat posed by China.

After laying the groundwork, the G7 summit has reached a critical moment for the United States to achieve its next goals and work together with its allies to promote investment review. It should be noted that four of the G7 are European countries, and if they can resonate with Europe, it will be much easier to reach consensus on the joint investment review mechanism.

So, the American media began to concentrate their efforts in order to prevent allies from not understanding the United States' intention to "take risks.". In May, the US Foreign Affairs magazine published an article explaining "risk reduction", which clearly stated that "risk reduction" means limiting the development of high-tech fields such as chips and semiconductors in China.

During the G7 conference, US President Biden publicly mentioned the term "de risk" for the first time, with specific expressions almost identical to Sullivan's.

However, the effectiveness of such "mind attack techniques" is not as expected.

The G7 communique ultimately did not contain any investment restrictions on China, and specifically mentioned that "maintaining cooperation with China is very necessary.".

German Chancellor Scholz made a statement during the G7 summit, as if humiliating the United States, stating that he would continue to invest in China. In the first quarter of this year, investment in China by five G7 countries, including Germany, increased year-on-year or even surged.

France: Growth of 635.5%

Germany: Growth of 60.8%

UK: Growth of 680.3%

Canada: Growth of 179.7%

Japan: Growth of 47.7%

Germany saw a year-on-year growth of 60.8%, and compared to its neighbors, there is still room for improvement.

Why do US allies make rational choices in investing in China? In addition to tangible benefits, it has also become familiar with the path taken by the United States to counter attack its allies.

All the restrictions imposed by the United States on China are not without allies, but after they do come together, the United States has always been the one who takes the most advantage.

Before the investment restrictions on China, the main restrictive measure taken by the United States was export controls in the high-tech sector. In order to persuade Japan and South Korea to cooperate, an unprecedented trilateral summit was held, which gave face.

Where's the inside?

Last month, Japan implemented an agreement with the United States to restrict chip exports to China. Tan learned from insiders that the process scope of Japan's restrictions this time may be even larger than that of the United States.

This means that after the regulation takes effect, Japanese equipment cannot enter the Chinese market, and the United States can erode this part of Japan's market in China. Japan bears additional losses on behalf of the United States and is also retaliated by the United States.

Europe is also particularly familiar with such a story pattern, and after working together, what emerges is the high trade protection barriers established by the United States in some high-tech fields under the Inflation Reduction Act.

Despite repeated lobbying by the United States, neither Japanese officials nor the European Commission have explicitly stated their intention to adopt similar outward investment review measures as the United States.

Of course, we also need to be clear in our hearts that although the United States has not yet received support from its allies for investment restrictions, it is still continuing to fabricate language traps, attempting to make allied countries and even the world unconsciously use the concept of "risk reduction" and join the "China reduction" action. In this "heart to heart battle", the United States attempted to attract more people and create a cognitive effect of "fox pretending tiger's power".

The reality of being repeatedly stabbed by the United States should make truly understanding people more and more aware.

03 Counter attack

In fact, the American strategy of attacking the heart, a larger goal, is still shaking the confidence of the Chinese people.

Looking back at the time when the United States initially began to hype up investment restrictions in China, it was in February of this year, which was also a crucial starting period for China's economic recovery after the Chinese New Year and the transition from epidemic prevention.

This method has been used by the United States since 5 years ago. In 2018, the United States launched a trade war while engaging in a psychological confrontation with China. Five years ago, some people might have been nervous and would have said compromise quickly.

If we stand in the future and write today's history of China and the United States, this action by the United States can indeed be called a new milestone in the US technology war against China. However, facing the psychological pressure from the United States, our mentality should be more relaxed.

Five years have passed, and we have found that the term "paper tiger" still holds true.

The United States has such a strong influence, but after five years of trade war, its goal of cutting off China's ties with the world has not been achieved. China is still the same as China, and China is still the largest trading partner of more than 120 countries and regions.

Specifically in the field of technology, the US government has always been extremely vicious, from export controls to investment restrictions. We don't know what else will happen in the future, and it is becoming increasingly unreasonable and without a bottom line. What the US wants to see the most is us scaring ourselves. But faced with barbarism, there is not only one way.

While the United States is trying to persuade its allies to impose investment restrictions, its allies such as the European Union, Canada, and Japan are working with China to push for negotiations on global multilateral investment rules - the Investment Facilitation Agreement.

The members participating in this negotiation include over 110 WTO members, including many developed economies. Last month, the text negotiations for the world's first multilateral investment agreement were successfully completed.

Former Vice Minister of Commerce and Deputy Director General of the World Trade Organization, Yi Xiaozhun, who was deeply involved in the negotiation process, told Tan Zhu about the difficulties involved:

It should be noted that in the decades long history of the World Trade Organization, some developed countries such as the European Union and Japan have proposed the issue of multilateral investment agreements, but due to their requirements for investment access and protection, there are serious differences with developing countries, making it difficult to advance.

The successful completion of this text negotiation took six years to be achieved under the leadership and coordination of developing countries such as China. According to relevant institutions, if the Investment Facilitation Agreement goes into effect smoothly, it can bring up to $1 trillion in economic growth benefits to the world.

Six years, this length of time covers the entire process of the United States' containment and suppression of China.

When some people doubt global cooperation, some criticize globalization, and others firmly promote globalization. The facilitation of the Investment Facilitation Agreement occurred just before the US investment restrictions on China. This is undoubtedly a slap in the face for those who are willing to compromise and give up easily.

Whoever says the United States wants to do whatever the world wants to do.

Looking at the world economy, it is no longer just a matter of words.

The driving force of emerging and developing economies on world economic growth surpassed that of developed economies in 2001.

As more and more developing countries are able to enter the global value chain with their own advantageous factors, they naturally begin to become more favored new destinations for foreign investment.

By 2022, the attraction of foreign investment by developed countries has significantly declined by 37% to $378 billion, while the inflow of funds to developing countries has increased by 4% to $916 billion. The scale of attracting foreign investment in developing countries is nearly 2.5 times that of developed countries, and the growth momentum is booming.

Not only that, developing countries are also starting to invest more outward. This is also the profound structural force behind China's ability to promote the Investment Facilitation Agreement and defend globalization.

Shan Wenhua, Dean of the School of Law at Xi'an Jiaotong University, participated throughout the negotiation of the Investment Facilitation Agreement by the Chinese Permanent Mission to the World Trade Organization.

Shan Wenhua mentioned to Tan Zhu that the technology sector plays an important role in attracting investment and outbound investment from developing countries. Technical capital includes research investment, technological innovation, and intellectual property rights of research enterprises and institutions. The smoother flow of technological capital globally will bring two-way welfare growth to both investors and investees, and the Investment Facilitation Agreement creates such a smoother flow environment.

The United States has also been a beneficiary of globalization, but when the interests of global development conflict with the interests of the United States in maintaining its own global hegemony, its attitude is "to use when in conflict, to abandon when in conflict.".

As defined in the "Report on the Compliance of the United States with WTO Rule Obligations" released by the Department of Commerce on August 11th, US actions are: disruptors of the multilateral trading system, implementers of unilateralist bullying, manipulators of double standards in industrial policy, and disruptors of global industrial and supply chains.

The United States is abandoning the path it has taken before, making choices based solely on its own absolute interests, and even going to a state of hysteria and despair in order to suppress its opponents. This is probably the main reason why people are becoming increasingly confused and worried about the United States today.

However, when the development demands of all countries around the world are turned into concrete actions, globalization still has an endless driving force. The mist spread through the mouth and the various strategies used to attack should not and will not hinder these tangible desires and solid steps.

The correct choice in the face of the opportunities and challenges brought about by economic globalization is to fully utilize all opportunities, cooperate to address all challenges, and guide the direction of economic globalization.

In the face of problems, we should dare to use courage and wisdom to make the right choice when facing difficulties.