The United States issued a new executive order to restrict investment in sensitive technologies in China by companies in the United States

Earlier, U.S. President Biden signed a new executive order, imposing constraints on domestic businesses investing in China’s sensitive technologies such as semiconductors, quantum computing, and artificial intelligence.

This newly promulgated executive order is grounded in national security considerations, aiming to prevent Chinese domestic businesses from utilizing American funds and technology to develop technologies that might affect national security. It emphatically stipulates that whether through direct investment, joint ventures, or private equity and venture capital means, all such forms of engagement are within the ambit of the prohibition.

However, this executive order exclusively restricts investment activities subsequent to its issuance, leaving existing investments unaffected. Moreover, activities including trading stocks on the public market, or transactions by American domestic businesses transferring assets through subsidiaries, remain beyond the constraints of this new directive. Nevertheless, the U.S. government may still demand that businesses disclose the details of current investment transactions.

The Biden administration has asserted that this executive decision was taken subsequent to consulting with seven allied nations, and it will officially take effect in 2024.

Under the continued impact of the Sino-American trade war in recent years, domestic American businesses have substantially reduced risk investments within China. This has concurrently affected many semiconductor businesses that had been reliant on the Chinese market for growth. Whether this new executive order will engender more significant repercussions remains uncertain for now, but it could potentially provoke retaliatory measures from the Chinese government.