American companies will no longer be able to freely invest abroad in the most advanced technologies, first and foremost artificial intelligence (AI) or quantum computing, if this concerns “problematic countries”citing China in particular, the Treasury Department announced on Wednesday August 9 in a press release.
The decision, resulting from an executive order signed by President Joe Biden, should make it possible to “Defend America’s national security by protecting critical technologies from the next generation of military innovations”said the Treasury.
Washington also underlines the aspect “strictly limited” of the decree in order to “maintaining our commitment to cross-border investments”.
In concrete terms, the new rules require American companies and individuals to inform the administration of certain types of transactions and purely and simply prohibit others when they involve “entities related to the advanced technologies identified in the decree”.
Biden doesn’t want to help modernize China’s military
“China assumes its desire to acquire and produce essential key technologies that can help modernize its army, this decree aims precisely to limit American investments in the companies involved in this effort”explained during a press conference call a Biden government official.
The administration’s fear is that China will benefit from American investments not only in terms of technology transfer but also through “intangible benefits”such as support in setting up production lines, exchanges of knowledge and access to markets.
“At the last G7 summit, leaders underscored our common interest in appropriately protecting sensitive technologies with national security implications, and the value of controlling investments in this area”we added from the same source.
However, the decree should not concern certain types of transactions, as long as they concern listed companies or branches of American companies.
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“It’s a big step forward”estimated Nicholas Lardy, researcher for the PIIE, interviewed by Agence France-Presse (AFP), “because it is no longer just a question of restrictions on exports but now also on capital, which has not happened so far”.
But he believes that if the United States seeks alone to “cut funding from private investment funds or from venture capital”the effect could ultimately be limited.
Export controls
In addition, while the volume of transactions and their total amount affected by these restrictions could ultimately be very small, the real impact of this decision could be wider, believes for her part Emily Benson, director of project on commerce and technologies. for CSIS.
“It is possible that, even if they are not directly targeted by the bans, some companies could think twice about the type of investments they could make, which could reduce two-way investments in the long term”she added, questioned by AFP.
This new decision is a further step in American attempts to prevent China from reducing the technological gap that currently exists between the two superpowers.
In October 2022, the United States had indeed announced to strengthen controls on exports to China of high-end semiconductors “used in military applications”.
The Netherlands and Japan, also producers of semiconductors, followed suit in the United States in March, China responding in turn by announcing restrictions on exports of certain products, including the rare metals necessary for the manufacture of semiconductors.
On a visit to China last July, Treasury Secretary Janet Yellen stressed the desire to have precise and targeted measures and not with the aim of completely decoupling the economies of the two main world powers.
“I recalled that our measures are very targeted and centered on a few sectors for which we have fears in terms of national security”said Mr.me Yellen, who recalled at the same time as the objective “is not to cause a complete disruption of investment” Americans in China.