The Biden administration is preparing a new program that could prohibit U.S. investment in certain sectors in China, a new step to guard U.S. technology advantages during a growing competition between the world’s two largest economies, the Wall Street Journal reported on Saturday.
In reports provided to lawmakers Friday on Capitol Hill, the Treasury and Commerce departments said they were considering a new regulatory system to address U.S. investment in advanced technologies abroad that could pose national security risks, according to copies of the reports viewed by The Wall Street Journal.
The reports said the Biden administration may prohibit some investments while also potentially collecting information about other investments to inform future steps.
While the reports didn’t identify specific technology sectors the Biden administration views as risky, it said sectors that could advance rivals’ military capabilities would be a focus of the program.
People familiar with the work on the new program expect it to cover private-equity and venture-capital investments in advanced semiconductors, quantum computing and some forms of artificial intelligence. U.S. officials want to prevent American investors from providing funding and expertise to Chinese companies that could improve the speed and accuracy of Beijing’s military decisions, for example.
The federal government has long scrutinized foreign investment into the U.S., in some cases barring foreign investment in sensitive areas through an interagency panel called the Committee on Foreign Investment in the U.S.
But rules regulating U.S. investment abroad would be a new step, part of a broader effort by the Biden administration to hamper China’s ability to develop technologies that U.S. officials believe could pose a national security risk. Last year, the U.S. imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment aimed at slowing China’s military advance.
Biden administration officials are also reaching out to close allies in the Group of Seven advanced democracies to build support for the concept of restricting investment into China.
Sequoia Capital, one of the world’s largest venture-capital firms, has already started screening new investments in Chinese semiconductor or quantum-computing companies as it prepares for the new U.S. rules, the Journal has reported.
