The US blocks billions of dollars in overseas technology investments, and China vows retaliation.

The Chinese ambassador to Washington said that China would certainly take retaliatory action if the U.S. continued to impose further restrictions on the semiconductor industry.

Accordingly, Ambassador Xie Feng stated that China is not afraid of competition but needs a level playing field, not one where the US unilaterally imposes regulations. Currently, Beijing is banned by Washington from importing advanced chip manufacturing equipment.

In addition, the White House is considering imposing further mechanisms for evaluating overseas investment and restrictions on AI chips from China.

US Treasury Secretary Janet Yellen during her visit to China in early July. Photo: Reuters

The Biden administration is in the final stages of issuing an executive order limiting certain types of overseas investment, such as advanced semiconductors, quantum computing, and artificial intelligence.

Previously, in 2021, a similar bill was also presented to Congress but was not passed. According to Reuters, this new proposal requires notification of certain overseas investments instead of considering a ban on specific transactions, and has a narrower scope.

"China will certainly respond. We don't want a technology war or an iron curtain between the two sides," Xie Feng said in a statement.

In May, China's cybersecurity authorities announced that American chipmaker Micron Technology had failed a security review, thus banning companies operating critical domestic infrastructure from using its products.

In early July, US Treasury Secretary Janet Yellen made a four-day visit to China, meeting with numerous high-ranking Beijing officials, including Premier Li Qiang and Pan Gongsheng, the party secretary of the People's Bank of China.

During the visit, the US Treasury chief adopted a conciliatory tone, reaffirming that Washington was not seeking to isolate the world's second-largest economy , stating that "that would be disastrous for both and would destabilize the world."

However, within the United States, bipartisan lawmakers are proposing to empower the government to block billions of dollars in investment flowing into mainland China. Lawmakers aim to finalize the legal process for the new executive order by early September.

Regarding export restrictions, Yellen asserted that any new investment regulations (if any) would be “highly targeted, clearly oriented, and narrowly focused on specific sectors where the country has national security concerns” to avoid undesirable consequences.

(According to Reuters)

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