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U.S. Narrows Executive Order Restricting China, Leaving Out Important Industries

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President Biden’s executive order limiting American investments in China will be considerably narrower than originally planned, according to a report by Axios.

This focus will now highlight quantum computing, artificial intelligence, and semiconductors, according to the report. The executive order will not, however, involve biotechnology or battery technology, two significant industries that many fear could pose a threat to the U.S. and give a boost to China.

China’s biotech initiatives have already been revealed as a national security threat to the U.S., and the country also produces a couple of the most important and valuable elements of lithium-ion batteries — a significant piece of the U.S.’s green energy plans and an area where the U.S. currently lacks production capabilities.

The aim of the President’s order is to function as a branching-off point for future regulations in the same arena, and may signal further escalation of tensions between the U.S. and China. It is also not expected to be finalized before Secretary of State Blinken’s first trip to China in February, and would figure to be a likely subject of Blinken’s China talks, but an Administration official said the order and Blinken’s trip are unrelated.

The elements of the order have been under discussion within the Administration for months. Jake Sullivan, the U.S. National Security Advisor, discussed the order in December with Cabinet secretaries including Treasury Secretary Yellen, is seeking comment from “partners and allies,” along with think tanks and other experts.

In response to China’s heightened hostility, the pandemic, and the conflict between Russia and Ukraine, there has been bipartisan support for advancing strategies counter China’s military technological gains.  The strategy represents “strangling with the intent to kill,’” as one think tank analyst put it.

However, U.S. allies, such as South Korea and the Netherlands, have some qualms about the Administration’s approach to export-control.

This executive order about “outbound” funds can lead to corresponding inbound fund rules, which are examined by the Committee on Foreign Investment into the United States (CFIUS) and can involve a lengthy revision process. While Congressional leaders seem pleased with the Administration’s efforts so far, they are eager to join forces and continue the effort. With the Biden administration taking some steps, vital industries being left out of the restrictions in this order leaves many asking: why?