China hawks who want to limit how U.S. investors send money and share industrial know-how with Chinese businesses in sensitive advanced technology sectors see signs of halting progress from the Biden administration and Capitol Hill, but aren’t optimistic that serious action is coming this year.
Those signs include the coming retirement of one of the most potent threats to legislative efforts to restrict outbound investment into China. House Financial Services Chairman Patrick T. McHenry, R-N.C., who in December thwarted efforts to include a Senate-passed provision that would screen outbound investment into security-related sectors in China and other adversarial countries in the final version of the fiscal 2024 National Defense Authorization law, has said he will leave the House at the end of this Congress.
And the Treasury Department is expected to announce regulations this summer implementing an August 2023 executive order issued by President Joe Biden. The order prohibits private equity and venture capital investments from flowing into sensitive technology sectors in China, including artificial intelligence, quantum computing, semiconductors and microelectronics if they would help Beijing gain new military capabilities. The administration says the theory behind the order is to erect a “high fence” around particularly critical areas of U.S. investments and technologies but to otherwise allow continued U.S.-Chinese trade.
