The directive, aimed at preventing American investors from inadvertently bolstering China's technological innovations that could enhance its military capabilities, will only affect future investments. Current investments are not expected to be impacted, but there may be demands for disclosure about past transactions. The order is expected to come into effect next year after several rounds of public feedback. China has expressed strong opposition to the move, stating it disrupts economic cooperation and trade.
Key takeaways:
- President Joe Biden has signed an executive order restricting U.S. investments in Chinese tech sectors, including AI, semiconductors, and quantum computing, to prevent American resources from aiding China's technological and military growth.
- The order allows the U.S. Treasury secretary to limit U.S. investments in specific Chinese entities within these sectors, mainly addressing private equity, venture capital, joint ventures, and greenfield investments.
- The new rules only pertain to future investments, with potential exemptions for specific deals, including those involving publicly traded instruments and certain intracompany transfers.
- China has expressed strong disapproval of the U.S.'s decision, stating that it disrupts the regular functioning of enterprises and compromises the global economic and trade order.