US companies are worried, Biden's executive order to restrict investment in China | Company | Biden
On August 9th local time, US President Biden signed an executive order restricting US investment in so-called sensitive high-tech areas such as semiconductors, quantum computing, and artificial intelligence in China. This long-standing investment restriction on China has caused concern in the US business community.
According to the website of CBS on August 9th, the Biden administration has finally issued an executive order after several months of contact with the US private sector. Some American executives have expressed concerns that restricting the flow of US capital to China may harm US business and have a negative impact on the US economy. China is the world's second-largest economy with over 1 billion consumers, making it an important market for many American companies.
According to reports, the National Committee on US China Trade has issued a statement stating that it will closely monitor how the Biden administration defines "technology and products that cover national security" given that the United States benefits from a large number of non national security related businesses in China.
The statement stated, "We hope that the government and US allies and partners can make more progress in promoting common interests and prevent US unilateral policies from putting US companies at a disadvantage when facing foreign competitors."
The Semiconductor Industry Association of America has issued a statement expressing its hope that the final rules will allow American companies to "compete in a fair environment and enter major global markets, including China, in order to enhance the long-term strength of the US semiconductor industry and surpass global competitors in innovation capabilities.".
US President Biden attended an event in New Mexico on August 9th.
Agence France Presse quoted Emily Benson, Director of the Trade and Technology Program at the Center for Strategic and International Studies, as analyzing that although the amount and quantity of transactions covered by the ban or notification mechanism may be small, this does not necessarily mean that the overall impact is limited.
Benson said, "Although companies have not directly received bans, they may rethink the nature of their investments, and over time, this may have a cold cicada effect on bilateral investments."
Another report mentioning the "cold cicada effect" is from the website of The New York Times in the United States. According to reports, Gabriel Waldo, the Managing Director of consulting firm Teneo in the United States, said that considering the limited scope of the executive order, its direct impact may be limited, but the disclosure requirements in the executive order may have a chilling effect.
He said, "Politicians are increasingly seeing corporate investment in China as a form of collusion with foreign enemies, even if this behavior has not been illegally accused."
The report states that the US Treasury Department has already consulted with executives of US companies regarding the executive order, and will now officially listen to their opinions before drafting rules to be implemented next year. But American companies may change their investment strategies before the rules take effect, as they know these rules are coming soon.
Bloomberg News reported on August 10th that venture capital companies and the technology industry in the United States had previously lobbied the Biden administration to narrow the scope of restrictions, and investors were concerned that the White House would impose comprehensive restrictions on US investments. Allies also hold a boycott attitude, with the European Union and other countries stating that strict restrictions may harm the economy.
The key issue now, according to the report, is whether other countries, including allies of the G7, will follow Washington's actions. Over the past year, the US government has briefly introduced this executive order to allies and partners, stating that they must coordinate their actions to avoid other countries "filling in" the gaps created by the withdrawal of US investment.
Many American business people are concerned that companies from other countries may seize the share of American companies in the Chinese market. This can be seen from the statements of the National Committee on US China Trade and the Semiconductor Industry Association.
The BBC website cited analysis by Sara Baller Danzman, a senior researcher at the Atlantic Council, stating that although the United States has made efforts to limit the target range, the nature of some technologies is difficult to determine, which means that the risk of repression may become too broad.
She warned that this could ultimately harm the United States as it would increase business costs and isolate the country from technological progress.
