President Joe Biden has signed an executive order aimed at restricting investments in certain Chinese technology sectors that contribute to the advancement of China’s military. However, critics argue that the order falls short of effectively curbing investments and contains too many loopholes.
The executive order seeks to prevent U.S. investments in Chinese companies involved in developing technologies used to upgrade China’s military capabilities, such as microchips and artificial intelligence systems. Despite its intentions, the order does not address existing investments and includes exemptions, which have led to concerns about its effectiveness.
According to Bryan Burack, Senior Policy Advisor at the Heritage Foundation, the order is a small step in the right direction but not sufficient given the scale of the problem. He argues that the order has significant loopholes that undermine its effectiveness, suggesting that those who profit alongside the Chinese Communist Party (CCP) played a role in its dilution.
The restrictions outlined in the executive order will apply to specific technology categories, including semiconductors, quantum information systems, and artificial intelligence systems. The aim was to focus on the most acute security risks and prevent broad-reaching restrictions that would be challenging to enforce.
President Biden declared a national emergency over the matter, emphasizing that China’s technological advancements in its military pose an unprecedented threat to the national security of the United States. Despite this, the restrictions will not affect current U.S. investments in China, which amount to approximately $1.38 trillion. Only future investments will be subject to the restrictions, and certain investments may qualify for exemption status.
While Treasury Department officials will oversee the operational aspects of the order, the specific investments that qualify for exemption are yet to be determined. This has raised concerns among critics who argue that China could still receive U.S. investments in various technology companies falling under the categories outlined by President Biden.
GOP lawmakers, including Senator Marco Rubio and Representative Mike Gallagher, criticized the Biden administration for not taking stronger measures and highlighted the weaknesses in the restrictions. They argue that the order has too many loopholes and fails to address the dual-use nature of some key technologies. They call for stronger action from Congress to prevent funding China’s military buildup and human rights abuses.
However, Senate Majority Leader Chuck Schumer praised the executive order, describing it as a strategic first step to prevent American investments from funding China’s military advancement. The Biden administration reportedly worked with allies and the Group of Seven Nations in formulating the restrictions, indicating international collaboration on the issue.
The restrictions are expected to be implemented next year after going through rounds of public comments and an extended 45-day comment period. Critics have raised doubts about whether these processes will lead to tighter or weaker restrictions. Some argue that the extended timeline may provide an opportunity for a potential second Biden administration to drop the order.
Beijing expressed grave concern over the new restrictions and called on the U.S. to avoid hindering global economic and trade exchanges. The White House and Treasury Department have yet to respond to requests for comment on the matter.
Overall, while the executive order represents a step in the right direction, many critics argue that it falls short of effectively curtailing investments in Chinese military technology sectors. The inclusion of loopholes and exemptions has raised concerns about the order’s effectiveness. It remains to be seen how the implementation process will unfold and whether additional measures will be taken to address these concerns.
