Biden’s China Investment Rules Go Far Enough
The new restrictions are more narrowly focused than critics had hoped. That’s a virtue, not a weakness.
Investors beware.
Photographer: Qilai Shen/Bloomberg
With a long-awaited executive order restricting US investments in Chinese high-tech companies, President Joe Biden has sought to strike a balance between protecting national security and maintaining the larger US-China economic relationship. In that regard, the policy’s narrow focus is a virtue — and the administration should resist calls to widen it.
The new rules aim to prevent US investors from unwittingly helping Chinese companies develop technologies that could be used for military purposes. Current export controls block the sale of sensitive technology, such as cutting-edge semiconductors, but don’t prevent US funds from supporting their development in China itself. Moreover, when US venture capital and private equity firms make investments in Chinese companies, they provide not just money but also expertise, management help, and connections that can supercharge China’s technological advances.