After years of blacklisting various Chinese companies and monitoring their investments in the United States, the Biden administration has taken a major move to drive American companies away from China.
The American president has signed a provision specifically focused on cutting-edge technologies US critically important to security, with military surveillance and cyber capabilities. A move that aims to reorder the flow of capital and above all to distance American “know-how” from its biggest global rival, China.
What the provision provides
The measure, which will take effect from next year, bans US investment in advanced semiconductors and quantum computing and requires US investors to inform Washington should there be investments in other types of semiconductors and artificial intelligence. The measure also prevents US citizens and permanent residents from engaging in prohibited arrangements.
The purpose of the measure
According to White House officials, the move intends deny China American expertise in the technology sectormarket access, and other benefits that US venture capital and private-equity firms bring to their investments.
The measure could create further difficulties for American companies doing business in Chinaalready affected by the weakening of Chinese growth, is the long period of lockdown during the pandemic.
US-China tensions
The measure announced on Wednesday comes at a time of high tension between the two economies. Beyond the battle for economic and technological supremacy, Washington and Beijing also clash on geopolitical issues such as Taiwan, and the war in Ukraine. Two issues that further fuel the rivalry between the two countries, despite the recent diplomatic efforts exerted by both sides.
China in deflation
Chinese leader Xi Jinping is facing a rather difficult time at home with a deflationary Chinese economy, slowing GDP growth and a slump in foreign investment.
We recall that just yesterday the data from the National Statistical Office showed a drop in consumer prices to -0.3% in July. And a drop, again in July, of 4.4% in the producer price index.