Biden's tech curbs to keep investors sidelined, fearing more steps
Joe Biden's move to prohibit some US technology investments in China is expected to keep investors on the sidelines, concerned that tougher measures are ahead as tensions simmer between the world's two biggest economies. US private equity and venture capital investors have already hit the brakes on sensitive technologies in China as relations have worsened since the administration of Biden's predecessor, Donald Trump, over issues from tech to China's industrial policies to national security.
Aiming to keep US capital and expertise from helping China's military modernisation and harming US national security, Biden's executive order on Wednesday was limited, for example by applying only to new investments. But it will not be the end of measures to tighten scrutiny of American investments in China, which is struggling to get back on its feet since the COVID-19 pandemic, dealmakers and analysts say.
The order authorises the Treasury secretary to prohibit or restrict US investments in Chinese firms in semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems. Congress may introduce legislation expanding on Biden's restrictions, said Weiheng Chen, senior partner and head of Greater China practice at law firm Wilson Sonsini.
Indeed, congressional Republicans immediately criticised the order by Democrat Biden as not going far enough. «Certain US investors may just choose to wait for the implementation rules before making investment decisions in these covered sectors,» Chen said.Shift to Yuan Acquisitions of Chinese companies by US firms have sunk almost 60% so far this year to $3.5 billion from $8.8 billion for the same period last year, according to Dealogic data, while
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