US mulls ban on tech investing in China; past efforts already bruised it
President Biden and the U.S. Congress want another economic paddle to punish China for its internal and external policies, and it appears to be investment.
The two branches of government are trying to further reduce the flow of war-making advanced technology in an effort to bring China into the global mainstream of policies. That means targeting venture capital from fueling biometric and other dual-purpose technology development.
An article in digital news magazine The Wire China points out this could be a miss for Washington because federal and state lawmakers have been loath to tamper in almost any way with venture and even private equity firms.
They are the ones minting unicorns, after all, so their operations are a kind of a black box to government.
Some restrictions on U.S. investment money going to China likely will be enacted, but they might be less relevant by the time the ink dries.
According to an annual survey by the American Chamber of Commerce in China, Chinese entrepreneurs are no longer the top-three investment option they once were – an outcome Washington must be happy to see.
A short list of actions by China seen as counter-productive or antagonistic includes military expansion into regional nations’ territories, alleged military involvement in surveillance electronics sold abroad, domestic oppression and, of course, reportedly launching balloons to spy on the U.S.
Global near-term investment plans are devaluing China, at least in part for the jostling.
Investment targets in China were ranked “not a high priority” by 17 percent of responding chamber members in 2023. That rank had hovered at about 10.5 percent from 2018 to 2021.
At the same time, those feeling China is a “first priority” for investment plans slid from about 21 percent of the same period to just 14 percent this year.
It bears mentioning that Beijing’s attitude toward intellectual property rights – in a word confiscatory – had been seen as improving (69 percent said it was getting better in 2019). It has been sinking ever since, according to chamber members. It was at 36 percent this year.
Asked about top business challenges for technology and R&D that investors face in China, 65 percent cited U.S.-China. A chief element here are the technology bans and sanctions placed on Chinese entities by the United States (and other democratic nations).
And for the first time in the report’s 25 years, chamber member in tech and R&D put data security concerns and increased Chinese protectionism in their list of top five challenges.
Tension between the U.S. and China looms large across the entire economy, too.
Almost eight in 10 chamber members in 2021, referring to all industry sectors, said U.S.-China tension was most problematic. That subsided to 56 precent last year before jumping to 66 percent in 2023.
Tension overall ranked third in 2019 and 2020, at just 45 and 41 percent, respectively.