Early last month, I sketched the contours of a Biden administration plan to restrict American investment in nations deemed antagonistic.
The curbs, reportedly in the works for nearly a year, are aimed at choking off the flow of US dollars to adversaries developing cutting edge technologies in key industries, including quantum computing, advanced semiconductors and selected AI applications.
Although the executive order and accompanying implementation details from Treasury and Commerce likely won’t single out any nation for being the proximate cause of alarm inside the Beltway, it goes without saying that the target is China.
Details were sparse at the time, and they remain so. But the initiative is likely to mandate stricter reporting and could ban certain investments altogether.
On Saturday, The Wall Street Journal outlined a similar-sounding plan. The new program, which may bar US investment in “certain sectors” in China, is “a new step to guard US technology advantages” at a time when Washington and Beijing are locked in a struggle for economic, technological and ideological supremacy.
Apparently, Congress received information on the strategy late this week. The Journal, which reviewed reports provided to lawmakers, described “a new regulatory system” designed to hinder US investment with the potential to threaten national security. The administration will earmark funding for the proposal in the budget.
As reported here a month ago, the new program will likely impact private equity and VC funding for AI, among other areas. Treasury and Commerce are expected to finalize the details soon.
Irrespective of whether the Chinese leadership views the plan as an actual setback (as opposed to just another symbolic broadside), it won’t be greeted warmly in Beijing. Party spokespersons and state media have been on (and on, and on) about what the Politburo views as illegitimate US efforts to stymie China’s development by way of “long-arm jurisdiction” and “bullying tactics,” to employ a couple of go-to talking points.
Of course, this is nothing new. In 2022, the White House announced new US export restrictions aimed at curtailing China’s capacity to advance critical domestic tech initiatives, and in many ways, the Biden administration’s efforts are an extension of various Trump-era initiatives, only without Trump’s flagrantly transactional approach.
Needless to say, the bilateral relationship between the world’s two superpowers scarcely needs to deteriorate any further. Antony Blinken’s meeting with Wang Yi in Munich last month was anything but cordial. Just a few days later, Wang was in Moscow sitting across from Vladimir Putin.
Biden can expect to enjoy more bipartisan support for restrictions on US investment flows to China than virtually any other issue of concern in an otherwise hopelessly partisan environment.
Thanks for highlighting this.
I’ve probably been over-thinking this, but it sure looks like this conflict is accelerating at a dangerous pace.
Plain and simple the world is at war, with combat operations currently limited to Ukraine, a “natural” evolution from the colossal failures of the misguided Afghanistan and Iraq wars. If Trump or likeness returns to power the future of humanity and the planet becomes dire.
Sorry, John, I like and respect your market commentary, but this is just a bad take. Trump won’t ever return to power — his base has shrunk to maybe 33%, and is growing smaller by the day. He’s a loser. Bigly.
Obviously I hope you are correct, mfn…and I did say If…i see it tucked in on the end…hope alls well for you and loved ones…
Back at you, John.
If anyone in the US votes for a so-called leader who espouses war with China they are crazy. We tried this once before in Korea and they kicked our butts back to the 38th Parallel. Ask friends and relatives alive at that time what that was like. I had three uncles at the front. In those days the per capita income in China was less than $200/year and they had no nukes but they beat us anyway. War is not an option, though there are always some crazies who want to mix it up on the playground to prove that our kids can die better than their kids. Most of the big mouths saying this crap have never been there (heel spurs and rich daddies). Back in the day we all loved that line from the Godfather, “Keep your friends close and your enemies closer.” We loved it but now we can’t wait to ignore it. It’s still true, nevertheless and we never seem to want to learn.