Biden signs order blocking Chinese investment in US tech

President Biden signed an executive order Thursday bolstering a regulatory committee’s powers to review and take action on foreign investment in the U.S. economy, including in the tech sector where officials are increasingly concerned about Chinese actors.

The Committee on Foreign Investment in the United States (CFIUS), an interagency panel, will further scrutinize foreign investments and transactions related to national supply chains as well as in tech sectors such as microelectronics, artificial intelligence, biotechnology and advanced clean energy.

CFIUS will also more closely review foreign acquisitions of companies and firms over concerns that an investor could slowly gain control of a sector or technology, investments that pose cybersecurity risks and foreign investors who could exploit data on American citizens.

Treasury Secretary Janet Yellen said Thursday the executive order “highlights CFIUS’s increasing attention to national security risks in several key areas.”

“Strengthening our supply chains and protecting against foreign threats enhances our national security, and this Executive Order highlights CFIUS’s important role in that work,” Yellen said in a statement. “It also reaffirms CFIUS’s mission to protect America’s technological leadership and the security of our citizens’ sensitive data from emerging threats.”

J. Philip Ludvigson, a former Treasury official who worked with the CFIUS, said in a statement to The Hill that “businesses should not be surprised if Treasury comes knocking to learn more about investments that may pose a risk to the country.”

“For the first time since CFIUS was established nearly five decades ago, this order directs the committee to consider certain national security factors,” said Ludvigson, now a partner with international law firm King & Spalding.

The news comes amid increasing tensions between the U.S. and Beijing over a potential invasion of Taiwan and longstanding national security concerns with Chinese actors meddling with American businesses to acquire data or seeking to steal information on critical technology.

The Biden administration is also reportedly considering formalizing a rule to limit the shipment of advanced semiconductor chips and chipmaking equipment to China, which comes after Congress passed the CHIPs Act over the summer to boost the nation’s own semiconductor industry.

Under the Foreign Investment Risk Review Modernization Act passed in 2018, CFIUS expanded to scrutinize foreign investments and transactions that could jeopardize national security.

Chinese investors have poured billions of dollars into the U.S. technology sector, a stream of money that has steadily increased since 2010, according to a 2017 Council on Foreign Relations report.

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