Congressional leaders urge Yellen to bar US investment in China
Beijing is using American capital to develop technologies as her department debates rules, say congressional leaders
31 October 2023 - 18:07
by Michael Martina
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Washington — The Republican and Democratic leaders of a US congressional committee on China urged treasury secretary Janet Yellen to urgently implement outbound investment restrictions on the country, warning that Beijing is using American capital to develop technologies as her department debates new rules.
US President Joe Biden issued an executive order in August authorising the treasury secretary to prohibit or restrict US investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems.
The order, expected to be implemented in the coming year as the treasury develops new guidelines, aims to prevent American money and expertise from helping China develop technologies that could support its military modernisation.
China has condemned the move, but some US legislators have argued it has too many loopholes.
“As treasury deliberates on the definitions and scope to be issued in these guidelines, the Chinese Communist Party (CCP) is developing advanced technologies with the help of American capital and know-how,” Mike Gallagher and Raja Krishnamoorthi — the Republican chair and ranking Democrat on the House of Representatives’ select committee on China, said in a letter.
Yellen should adopt a broad definition of technology in her guidelines on the investment restrictions, the legislators said in the letter, dated October 30, arguing China has blurred the lines between commercial and military technology.
“We should expect that the CCP will seek to evade restrictions that are narrowly defined,” Gallagher and Krishnamoorthi wrote, adding that Yellen should not allow for “excepted transactions” they think would dilute the effectiveness of the rules.
They said the treasury should work with US authorities to pursue maximum penalties for violations, and address more passive flows of US capital, such as through public markets and mutual funds.
Some US officials have said the outbound investment rules should not be overly broad to avoid harming the US economy. Others, including former Biden administration officials, have called the measure a good first step, but said that Congress should provide resources to expand it.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Congressional leaders urge Yellen to bar US investment in China
Beijing is using American capital to develop technologies as her department debates rules, say congressional leaders
Washington — The Republican and Democratic leaders of a US congressional committee on China urged treasury secretary Janet Yellen to urgently implement outbound investment restrictions on the country, warning that Beijing is using American capital to develop technologies as her department debates new rules.
US President Joe Biden issued an executive order in August authorising the treasury secretary to prohibit or restrict US investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems.
The order, expected to be implemented in the coming year as the treasury develops new guidelines, aims to prevent American money and expertise from helping China develop technologies that could support its military modernisation.
China has condemned the move, but some US legislators have argued it has too many loopholes.
“As treasury deliberates on the definitions and scope to be issued in these guidelines, the Chinese Communist Party (CCP) is developing advanced technologies with the help of American capital and know-how,” Mike Gallagher and Raja Krishnamoorthi — the Republican chair and ranking Democrat on the House of Representatives’ select committee on China, said in a letter.
Yellen should adopt a broad definition of technology in her guidelines on the investment restrictions, the legislators said in the letter, dated October 30, arguing China has blurred the lines between commercial and military technology.
“We should expect that the CCP will seek to evade restrictions that are narrowly defined,” Gallagher and Krishnamoorthi wrote, adding that Yellen should not allow for “excepted transactions” they think would dilute the effectiveness of the rules.
They said the treasury should work with US authorities to pursue maximum penalties for violations, and address more passive flows of US capital, such as through public markets and mutual funds.
Some US officials have said the outbound investment rules should not be overly broad to avoid harming the US economy. Others, including former Biden administration officials, have called the measure a good first step, but said that Congress should provide resources to expand it.
Reuters
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