The Biden administration is upping the trade war with China.
President Joe Biden has signed an executive order that will limit certain types of foreign investment in the country, especially in leading-edge technologies, while also requiring disclosure of other investments. The White House says the move is about protecting national security.
MORTGAGE RATES ECLIPSE 7%, HIGHEST SINCE NOVEMBER, IN TROUBLING SIGN FOR MARKET
The move is designed to address the national security threat posed by "countries of concern" that could develop advanced technology to use for nefarious military, intelligence, or surveillance purposes.
"The Biden-Harris administration is committed to keeping America safe and defending America’s national security by protecting technologies that are critical to the next generation of military innovation," the administration said in a press release.
Cross-border investment is important to the U.S. economy, the release added, saying the order is "narrowly targeted" to protect national security.
The news comes after Treasury Secretary Janet Yellen visited China in July and criticized the country for its punitive measures taken against foreign firms, especially those from the U.S.
“During meetings with my counterparts, I am communicating the concerns that I’ve heard from the U.S. business community — including China’s use of nonmarket tools like expanded subsidies for its state-owned enterprises and domestic firms, as well as barriers to market access for foreign firms,” Yellen said.
“I’ve been particularly troubled by punitive actions that have been taken against U.S. firms in recent months,” she added.
Administration officials held a conference call with reporters Wednesday afternoon to outline the move, saying it should not come as a surprise to major U.S. companies because it has already held a series of meetings with relevant stakeholders who would be affected.
The order specifically names quantum information technology, artificial intelligence systems, semiconductors, and microelectronics as prohibited types of investment, and follows other sweeping restrictions on U.S.-China trade introduced in the past year.
The new program will be administered by the Treasury Department and will require notifying Treasury about certain transactions along with full prohibitions on others.
"It's important to recognize this is a national security action, not an economic one," a senior administration official said.
China is mentioned specifically as a country of concern, and the White House says the country already has the ability to exploit U.S. investment to produce "sensitive technologies" that could enhance its military. Tensions between the U.S. and China have been escalating for years, most notably as the latter begins taking more aggressive actions toward its claims over Taiwan.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
White House officials said the idea behind the executive order is to prevent China from obtaining U.S. information and intelligence, not just American money. The United States already prohibits or restricts many exports to the country.
The Treasury Department is also proposing a rule that would further define the size and mission of the program and get feedback from the public. That rule would be finalized at a later date.