The ban by the Biden administration includes private equity and venture capital investments in China.

The Biden administration has issued an executive order restricting US investors from funding Chinese companies engaged in certain technology development that could have military applications. The order aims to prevent these technologies from being utilized by China’s military.

The targeted technologies include semiconductors, microelectronics, quantum computing, AI-incorporated software for military use, and networks. The White House believes that the blurred lines between civilian and military technology sectors in China pose a risk, enabling the development of advanced weaponry and encryption-breaking tools. (The Register)

The restrictions pertain to deals for gaining ownership stakes (for instance, through mergers, acquisitions, private equity, venture capital, and similar arrangements), investments in new projects, collaborations, and specific debt financing transactions that can be converted into ownership stakes, according to the Treasury.

While Biden supports cross-border investment, he asserts that for China, such investment needs to be controlled due to national security concerns.

The order by the Biden administration may escalate tensions in US-China relations, which have already been strained by sanctions and export controls on technology-related products.

China has criticized the order, branding it as economic coercion and tech bullying. However, other countries like Taiwan and South Korea also maintain checks and control on outbound investments.

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