President Biden will announce an executive order that bans investments in some Chinese tech companies in 2024.
The move escalates the White House’s efforts to limit Beijing from developing advanced military technology.
It will also require Americans conducting business in China to inform the US government about it.
President Joe Biden is set to introduce an executive order on Wednesday that limits investments in certain Chinese technology companies, the New York Times first reported.
In an attempt to halt the flow of US dollars and technical expertise to China, the new restrictions would bar private equity and venture capital groups from investing in certain technologies in the country, including artificial intelligence, quantum computing, and semiconductors, according to the report.
The order has been in the works for some time already, and it will undergo a public comment period. US Treasury Secretary Janet Yellen had discussed certain parameters with Chinese officials in July.
While the move is intended to protect national security interests, it comes as relations between the US and China are at a tense crossroads. The Biden administration has maintained that recent measures aren’t meant to limit economic growth for China, but the US has also halted trade with the country that would enrich its AI and chip sectors on the basis of stemming the advance of its military in those areas.
The Wednesday development marks the latest step by the White House to limit investors’ involvement and access to Chinese markets. In July, the Wall Street Journal reported that the US could soon curb cloud providers from selling services to China.
Meanwhile, direct investment liabilities, a gauge for China’s foreign investments, plunged to a 25-year low in the second quarter, Bloomberg data shows. It’s another sign that illustrates how the Chinese economy has stumbled out of the pandemic rather than rebounding.
Separate data from China’s National Bureau of Statistics showed that consumer prices dropped annually in July for the first time in two years, with the economy slipping into deflation. Analysts expect the downbeat reading to lead to more calls for fiscal stimulus.
“With CPI and the PPI both falling simultaneously for the first time since 2020, it confirms economy-wide deflation which will increase the drumbeat for more stimulus,” Deutsche Bank strategist Jim Reid said Wednesday.
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