China urges US to 'think twice' about investment ban in tech sector

By Al Mayadeen English
Source: Agencies
29 Sep 2023 14:10

The specified aim of Biden's order is intended to safeguard national security and prevent US capital from contributing to China's alleged military endeavors.

Visitors walk past a display from Chinese technology firm Alibaba at the PT Expo in Beijing, on Sunday, June 4, 2023. The annual expo showcases Chinese and foreign technology firms. (AP Photo/Mark Schiefelbein)

Chinese state television reported on Friday that China's International Trade Council has officially requested the US to "carefully consider" regulations that prohibit or limit US investments in China's technology sector.

Last month, US President Joe Biden issued an executive order that prohibits or imposes limitations on investments in Chinese companies engaged in semiconductors, microelectronics, quantum information technologies, and specific artificial intelligence systems.

According to state television, the China Council for the Promotion of International Trade, overseen by the Ministry of Commerce, expressed concerns that the order establishes "vague and broad restrictions" on investors and transaction categories, without distinguishing between military and civilian purposes.

"That not only gives rise to transaction risks and compliance cost...but also damages the highly inter-dependent global industrial chain," the chamber added.

The specified aim of Biden's order is allegedly intended to "safeguard national security" and prevent US capital from contributing to what the US considers as China's alleged military endeavors.

US financial institutions, requested to submit their feedback by the September 28 deadline, are also advocating for more explicit guidelines concerning the proposed regulations. They assert that the rules are overly ambiguous and place the responsibility for compliance squarely on investors.

The guardrails are expected to go into force sometime next year.

The matter comes to light amid a global trade the US has been waging against China for several years now.

The US says products made by its companies are being utilized in Chinese military and surveillance programs, prompting the government to offer incentives, including grants and tax credits, for chip makers who start up their operations in the US.

However, the US still benefits from setting up factories in China as companies utilize favorable conditions to source raw materials and package and assemble their products in the country.

Observers argue that Washington's tech war against China could end up backfiring and fuel the Chinese drive to independently develop their own IT hardware and solutions, while US companies would be deprived of large profits from the largest chip market in the world.

On September 26, the South China Morning Post reported that China is reportedly preparing to construct artificial intelligence (AI) chip factories equipped with particle accelerators to produce its own cutting-edge laser source.

According to SCMP, the accelerator's electron beam will undergo a transformation into a "high-quality" light source, essential for the on-site production of AI semiconductor chips.

The initiative has reportedly brought together a team of scientists from Tsinghua University, who are in active discussions with authorities in the Xiongan New Area to identify the most suitable location for the construction of these advanced chip factories.

By harnessing particle accelerators in the semiconductor manufacturing process, China seeks to reduce its reliance on foreign technologies, a move deemed critical for its economic autonomy, especially amid Western attempts to limit China's technological advance.

This development could potentially serve as a strategic workaround for current sanctions imposed on China by the US.