Source: GT    Published: 2023-04-19

The Biden administration is reportedly nearing an agreement to curtail China's technological and military rise by establishing unprecedented rules to limit US investment in the world's second-largest economy, the latest Washington containment of China's technology sector.

Experts said the move will harm the interests of US firms, which are rooting for China's rebounding economy especially in the post-COVID period and disrupt the global industry chains as China is still the world's manufacturing powerhouse. In the long run, US' decoupling and protectionism will harm itself.

The rules are expected to be hammered out later this month, and the Biden administration has begun briefing industry groups like the Chamber of Commerce on the broad outlines of the executive order. The order is expected to require companies to notify the US government of new investments in Chinese technology companies and prohibit some deals in critical sectors like microchips, according to a report by Politico on Tuesday.

"The move is aligned with the US government's trade actions on China last year," He Weiwen, a senior fellow at the Center for China and Globalization, told the Global Times on Wednesday.

The US Department of Commerce's Bureau of Industry and Security announced an extensive set of regulations in October last year, which restricted chips made by using US tools from being exported to China. The Biden administration is also forcing other countries to contribute to its goal of undercutting China's ability to make advanced chips.

"From trade to now investment, the Biden administration is essentially targeting China's rising technology prowess, which the US has resolved to do with a cold war mentality yet without any support from market logic and economic rules," He noted.

Meanwhile, the rules are expected to have a limited impact on further investment in the country by US companies, which are doubling down on the vast Chinese consumer market, but technology-related content in investment will be affected, according to He.

"There will be obvious harm to US technology start-ups or innovation-driven firms that need the Chinese market to apply their technologies, test their products and propel their innovation," Gao Lingyun, an expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times on Wednesday.

The US-initiated decoupling move, which distorts markets and efficiency, will finally translate to a huge disadvantage for the country, adding to the costs of its companies and consumers, Gao said, and it will also disrupt global industry chains. Thus, it's doomed to fail.

The US is not seeking to decouple its economy from China's or limit the country's growth, which is neither practical nor in the US' interest, US Treasury Undersecretary for International Affairs Jay Shambaugh said in an interview with Bloomberg Television on April 10.

US Treasury Secretary Janet Yellen will lay out the Biden administration's principal objectives for the US-China economic relationship in a speech in Washington on Thursday.

While Washington is politicizing restrictions on China, US firms are rooting for the country's rebounding economy as China is poised to open up its market wider to the rest of the world amid its economic recovery this year.

From US carmaker Tesla to chip giant Intel, they have recently unveiled new business plans in China, serving as fresh examples of US companies' confidence in the nation, as the world's second-largest economy is ramping up its efforts to further attract foreign investment.

Tesla said it will build a Megafactory in Shanghai to make its energy storage product Megapack. Groundbreaking is set for the third quarter of the year and production is to start in the second quarter of 2024.

Intel held an opening ceremony of setting up an office for its integrated circuit business in Sanya, South China's Hainan Province in early April. The entity will carry out international trade, technology services and equity investment activities, aiming to create a new business entity as well as Intel Capital's business headquarters in China, the company said in a statement sent to the Global Times.

According to the 2023 White Paper on the Business Environment in China, published by the American Chamber of Commerce in South China on February 27, more than 90 percent of the participating companies chose China as one of the most important investment destinations and 75 percent of the companies said they planned to reinvest in China in 2023.

Foreign-funded companies, including US companies, remain optimistic about the Chinese market and plan to expand their business, Chinese Foreign Ministry spokesperson Mao Ning said in a press conference in March.

"China-US trade and investment cooperation is mutually beneficial and win-win. Decoupling and breaking the chain will harm others and ourselves. It is unpopular and unfeasible," Mao said.

"No matter how the international situation changes, China's determination to expand high-level opening-up and share development opportunities with the world will not change. We welcome companies from all over the world, including US companies, to enter the Chinese market, share development dividends and jointly promote world economic growth," Mao added.