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August 10, 2023updated 16 Aug 2023 9:57am

UK considering security risks of Chinese technology investments

The US efforts are focused on reducing the risk of China using chips and AI to modernise its military in ways that could target the US.

By Ryan Morrison

The UK government is monitoring the situation surrounding the latest ban on Chinese technology investments by US President Joe Biden, according to a statement from Downing Street. A spokesperson for Prime Minister Rishi Sunak said the British government is assessing “potential national security risks attached to some investments.”

The White House has been working to reduce China tech investments. (Photo: William Potter/Shutterstock)
The White House has been working to reduce the advancement of Chinese deep tech to prevent its use in military applications (Photo: William Potter/Shutterstock)

Today’s order authorises the US Treasury Secretary to prohibit or restrict some investments in ‘countries of concern’ and monitor the investment activities in those countries, specifically targeting private equity, venture capital, joint ventures and greenfield investments. It also specifically bans investment by US companies and others in Chinese firms developing software to manufacture computer chips and the tools to build them. It remains unclear whether other semiconductor manufacturing powerhouses, like Japan and the Netherlands, will impose similar restrictions.

The Biden administration has been locked in a battle for several years now to slow down the growth of China’s advanced technology base, not least those sectors that aid and abet the country’s military-industrial complex. Measures from the White House thus far have included bans on selling chips and the equipment used to make them in China. The latest phase in this fight has seen the White House issue several more bans on investments in Chinese technology companies and impose new reporting requirements for funding technologies in China. Both the bans and reporting requirements are currently narrowly focused on advanced semiconductors, quantum computing and select AI systems.

Chinese technology investment target for Biden administration

President Biden described the growing Chinese technology industry as a “national emergency” for the US. In a letter to Congress, Biden argued that it was important to deal with advancement “in sensitive technologies and products critical to the military, intelligence, surveillance or cyber-enabled capabilities.”

Chinese embassy spokesperson Liu Pengyu described the latest development from the White House as an escalation of “suppression and restrictions on China.” He said today’s order runs contrary to previous claims made by the White House that it does not wish to hurt the Chinese economy. “We urge the US side to honour its words,” Liu added.

China’s Commerce Ministry also issued a statement saying it was “gravely concerned” by the order and reserved the right to take retaliatory action. It says the order affects normal operation and decision-making of enterprises and undermines the international trading norms. It urged the US to respect laws of the market economy and principle of fair competition. 

The UK has been trying to stabilise its relationship with China after the latter imposed new security rules in Hong Kong earlier this year. Foreign Secretary James Cleverly said in April that the British government would seek to protect itself by limiting national security threats posed by China, while engaging in trade, investment and climate change.

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The UK also has an agreement with the US to strengthen the historical security alliance between the two countries, including deepening economic ties in areas like advanced technology, clean energy and critical minerals. This might make it hard for Sunak’s government to take a different direction on Chinese tech to the White House.

A spokesperson for the Prime Minister’s office said the executive order provided fresh clarity on the US approach and that the UK would “consider these new measures closely.”

Read more: How to sell a chip to China

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