The United Kingdom is considering imposing restrictions on Chinese tech investments amid growing concerns about national security risks. The move comes as the UK seeks to align itself with the trade policies of US President Joe Biden, who recently implemented new national security curbs on investment in key Chinese tech sectors. In a survey sent to British companies, the UK government is seeking to understand investment flows in sensitive sectors and is specifically asking firms about their investments in 17 areas, ranging from advanced materials and robotics to transport, energy, and communications.
The survey is seen as the UK’s first step towards understanding business investment in strategic rival countries, including China. It follows a pledge by the UK government to align more closely with the US on policies aimed at preventing the transfer of dual-use technology to China. However, there are concerns that the UK government could cast the net too widely, impacting sectors such as microchips. British semiconductor firm Arm, which licenses its chip designs to Chinese manufacturers, could be particularly affected.
The implementation of restrictions on investment could force international businesses, especially those with leverage in the Chinese market, to make difficult decisions. The British government’s approach to outbound investment screening is still in its early stages, but it signals a growing intersection between national security concerns and trade policy. Some argue that such restrictions are necessary due to intense geopolitical rivalry and the Chinese Communist Party’s use of high-tech to advance its global supremacy ambitions.
UK businesses are feeling cautious about the potential impact of wide-ranging restrictions, given the government’s track record of implementing broad policies that may cause difficulties for industries. However, the survey does not indicate an immediate precursor to legislation. The UK government aims to strengthen economic security as a priority but recognizes the need to get the potential measures right.
The UK’s plan for outbound investment screening will likely differ from that of the US. The UK government intends to develop an evidence base for national security risks in investment flowing from the UK to countries of concern. It is expected that the UK will target emerging technologies that pose national security concerns and reflect the country’s unique supply chain risks. While the survey includes sectors covered by the existing National Security and Investment Act, experts suggest that additional legislation may be necessary.
The UK government’s effort to gain control over investment flows is seen as a sensible starting point, but it must navigate the tension between aligning with the US and supporting domestic investment to establish itself as a tech superpower. British firms are approaching the situation with caution rather than panic, recognizing that they cannot stop everything and that the landscape has changed. Both UK Chancellor of the Exchequer Rishi Sunak and President Biden have prioritized economic security in bilateral cooperation between the UK and the US.
In conclusion, the UK government is considering implementing restrictions on Chinese tech investments as part of its efforts to align with the US’s trade policies. A survey has been circulated to British companies to gain an understanding of investment flows in sensitive sectors. However, concerns have been raised about potential broad restrictions and their impact on industries such as microchips. The UK government aims to strike a balance between national security concerns and supporting domestic investment in emerging technologies. British firms are approaching the situation with caution and recognize the need to navigate a changing landscape.
