US President Joe Biden has said that a widespread technology war is bad news for American business, financial giants, high-tech industries and consumers. Over time, it will punish Asian economic recovery and global economic prospects.
Pressed to clarify economic and security policy toward China, the Biden administration recently sent two top emissaries to say the United States does not want to “disengage” from China (which it is effectively doing).
Both Treasury Secretary Janet Yellen and National Security Adviser Jake Sullivan did not respond to questions about how Washington plans to curb technology transfer and investment in China. That has fueled the perception that the new US measures could hurt investors and disrupt the global trading system. The US is at risk of the wrong technology war.
Over the past few years, the US Congress has strengthened the Committee on Foreign Investment in the United States and used its powers to scrutinize the overseas investments of some American enterprises. In the year In 2018, Congress overhauled the system by introducing checks on investments into the United States and controls on exports of goods and technology. Last October, the Biden administration announced clear and controversial restrictions on exports of sensitive technologies to China to undermine the country’s ability to purchase advanced chips and chip manufacturing equipment.
The administration has also built “guard lines” into the CHIPS and SCIENCE Act, limiting the investments that grant recipients can make in China. Additionally, sanctions were added to the Treasury’s “Specially Selected Citizens” list.
Thus, to argue, like Yellen and Sullivan, that the administration will impose only “tight” investment restrictions, is self-delusion. More importantly, the measures have broad and unintended negative implications, especially at a time when the US economy is on the brink of recession, and the risk of a burgeoning banking crisis and debt default is rising.
In addition to the proposed ban on foreign investment by U.S. companies in Chinese technology companies, the administration wants to limit the amount and type of technology currently sold to China. Initially focused on advanced semiconductors, the guidelines move on to artificial intelligence, quantum computing, electric vehicles and rare earth metals, in short, emerging industries envisioned for the future.
Interestingly, both the White House and bipartisan groups in Congress have struggled to reach an agreement on limits on foreign investment. As always looking for competitive edge, American businesses and financial giants still want to do business with China, but ordinary Americans will choose cheaper, more affordable prices any day. However, the Biden administration, Capitol Hill and the Pentagon have different goals.
As US think tanks have predicted, Biden’s executive order targeting China will have a major impact on investments by individuals and companies in publicly listed Chinese enterprises, investments in venture capital and private equity fund startups, investments by US companies, especially in research. and activities of development or manufacturing facilities in China, and subsidiaries of U.S. companies and U.S. subsidiaries of foreign enterprises.
Despite the administration’s efforts to internationalize these misguided policies, the United States will be alone in walking the talk. Although the EU has expressed a rhetorical interest in an outbound regime, it is unlikely to translate that interest into action in the near future. And Japan and the Republic of Korea have foreign investment review regimes, but both are narrow.
If this is the case, why is the Biden administration in such a hurry? Two weeks after Biden announced his re-election campaign, his approval rating has hit a record low of 36 percent. As the administration has failed to reset relations with China, expanded the trade war into a technology war, overturned economic policies and become embroiled in a controversial proxy war in Ukraine, Biden’s status began to decline.
And with fiscal policy leading to runaway inflation, a worsening banking crisis and another debt-limit mess, this trend isn’t likely to change anytime soon.
Any small security gains the Biden administration may gain from curbing American investment and the international recognition of China’s high-tech companies could be offset by the massive collateral damage these new restrictions could cause.
Over time, the sanctions could ensure that Americans don’t learn from Chinese tech companies, many of which are at or near the top in science and technology.
In the year In early 2021, former World Trade Organization economist Anne Kruger said former US President Donald Trump’s modus operandi was to threaten Beijing on trade, foreign investments, cyberspace, e-commerce, intellectual property, the South China Sea, Taiwan and other issues. She proposed a complete reset in the US-China trade relationship.
If Trump’s explosive go-it-alone approach is fundamentally flawed, Biden’s tech restrictions will punish American businesses, investors, and consumers, and spur a global recovery with huge losses in missed opportunities. It’s the wrong thing to do at the wrong time.
The author is a founding member of the Diversity Group and has served at the India, China and America Institute (USA), Shanghai International Studies (China) and the European Union Center (Singapore).
Its views do not necessarily reflect those of China Daily.
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