The order focuses on semiconductors, artificial intelligence
and quantum computing. It won't affect any existing investments and will only
prohibit certain transactions. Other deals will have to be disclosed to the
government.
The timing for the order, slated for the second week of
August, has slipped many times before, and there is no guarantee it won't be
delayed again. But internal discussions have already shifted from the substance
of the measures to rolling out the order and accompanying rule, said the people
familiar who spoke on condition of anonymity.
The restrictions won't take effect until next year, and
their scope will be laid out in a rulemaking process, involving a comment
period so stakeholders can weigh in on the final version.
A spokeswoman for the National Security Council declined to
comment.
The investment controls are part of a broader White House
effort to limit China's capabilities to develop the next-generation
technologies expected to dominate national and economic security. The effort
has complicated the Biden administration's already fraught relations with
China, which sees the restrictions as an effort to contain and isolate the
country.
China's envoy in Washington said earlier this month that
Beijing would retaliate if the US imposes new limits on technology or capital
flows but didn't detail what actions the country could take.
Treasury Secretary Janet Yellen has sought to calm Chinese
anger over the curbs, saying they wouldn't significantly damage the ability to
attract US investment and were narrowly tailored.
“These would not be broad controls that would affect US
investment broadly in China, or in my opinion, have a fundamental impact on
affecting the investment climate for China,” Yellen said in an interview with
Bloomberg Television earlier in July.
Yellen emphasized the restrictions as well as existing
export controls were not in retaliation for any specific actions from China or
intended to curtail the country's growth.
During her visit to China earlier this month, Yellen
reiterated that stance in a meeting in Beijing with Chinese Vice Premier He
Lifeng.
National Security Adviser Jake Sullivan first publicly
discussed the concept in July 2021. China hawks in the US are eager for tougher
and faster action. Lawmakers from both parties have also shown interest in
legislating on the matte,r although a bill has not yet made it to Biden's desk.
The Senate this week passed an amendment to the national
defense policy bill that would require firms to notify the government about
certain investments in China and other countries of concern, although they
wouldn't be subject to review or possible prohibition. © Bloomberg
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