News on August 10, the official website of the White House announced this morning that US President Joe Biden signed an Executive Order (E.O.) on addressing US investment in certain national security technologies and products in relevant countries, authorizing the US Treasury Secretary to supervise the US Certain Investments in Countries of Concern. Certain areas of national security involve the three fields of semiconductors and microelectronics, quantum information technology, and artificial intelligence. The annex to the executive order focuses on China.
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The White House said the plan complements existing U.S. export controls and entry screening tools with a "small yard, high fence" approach to address national security threats posed by countries advancing such sensitive technologies. Specifically, it would prohibit certain investments in entities engaged in specific activities related to these technology areas that pose the most serious national security risks, and require notification of other sensitive investments.
At the same time, the U.S. Department of the Treasury issued an Advance Notice of Proposed Rulemaking (ANPRM), detailing the scope of the program. Written comments on the ANPRM will be published on the U.S. Department of the Treasury website within 45 days, and a draft regulation will be released later. The order is expected to be implemented next year after several rounds of deliberations, it said.
The White House emphasized that this executive order was signed by Biden after extensive and thorough consultations with hundreds of stakeholders, industry members, and allies and partners. The U.S. government will continue these campaign notifications and comments to solicit additional public feedback to make any necessary adjustments to the rules before they go into effect.
After the announcement of the executive order, China expressed its opposition and serious concern. The spokesperson of the Ministry of Commerce of China said that the United States restricts foreign investment of domestic enterprises and engages in "decoupling and breaking chains" in the investment field under the guise of "reducing risks". This seriously deviates from the principles of market economy and fair competition that the United States has always advocated and affects the normal operation of enterprises China is seriously concerned about this decision, which undermines the international economic and trade order and seriously disrupts the security of the global industrial and supply chains, and reserves the right to take measures. It is hoped that the US will respect the laws of the market economy and the principles of fair competition, and will not artificially impede global economic and trade exchanges and cooperation, or set up obstacles for the recovery of the world economy.
It is reported that since the then US President Trump signed the "National Defense Authorization Act for Fiscal Year 2019" in August 2018, which strengthened CFIUS's ability to review overseas investments, the US has imposed export controls on more Chinese companies since Biden took office. Earlier, Xie Feng, Chinese ambassador to the United States, stated that the United States has so far included more than 1,300 Chinese companies and individuals in the "entity list".
In October last year, the U.S. Department of Commerce’s Industry and BIS announced a series of new rules for the implementation of export controls on China’s advanced computing and semiconductor manufacturing items, which will take effect in stages on October 7, 12 and 21, 2022. In the two key areas of advanced computing chips and semiconductor manufacturing items, BIS restricts the export of US items, expands the jurisdiction of the long arm and controls the employment of "Americans", restricting China's access to advanced chips, supercomputers and manufacturing capabilities.
In May of this year, CCTV reported that the Biden administration plans to sign an executive order before and after the Hiroshima summit of the G7 leaders, strictly restricting US companies from investing in some high-tech industries in China, which may involve artificial intelligence, semiconductors and quantum technology. . At the US Congressional hearing on May 31, Paul Rosen, Assistant Secretary of Investment Security of the US Department of the Treasury, confirmed that "we are considering a plan to limit the flow of US dollar investment." Later, US media reported more details on the restriction.
On July 25th, Eastern Time, the U.S. Senate discussed the new year's National Defense Authorization Act (NDAA), and voted on one of the amendments to China's investment review - the "Foreign Investment Transparency Act". The case was passed by the Senate by 91:6.
The bill requires U.S. entities to report to the U.S. Treasury Department no later than 14 days before the investment and within 14 days after the transaction is completed if they invest in sensitive technologies in countries such as China, Russia, Iran, and North Korea 90 days after it takes effect. The U.S. Treasury will establish mechanisms to look for undeclared transactions. In addition, the U.S. government has to coordinate with allies and partners, and establish foreign investment review and declaration mechanisms in partner countries. Notifiable investment types include acquisitions, interests in short-term or long-term debt, establishment of subsidiaries, joint ventures, etc., including technology transfer through business partnerships, board representation or provision of commercial services. The related industries that must be declared involve advanced semiconductors and microelectronics, artificial intelligence, quantum information technology, hypersonic speed, satellite communications, and dual-purpose network laser scanning systems.
Today, the Biden administration has signed executive orders restricting investment in China in three areas: semiconductors, AI, and quantum technology. According to the content of the terms signed by Biden announced on the White House official website, the editors of Titanium Media App briefly sorted out ten key information:
Notification and Prohibited Transactions: The U.S. Secretary of the Treasury, in conjunction with other relevant agencies, shall establish regulations requiring U.S. persons to notify the Treasury Department of certain transactions with covered aliens (notified transactions) and to prohibit certain transactions with covered aliens. Other Transactions (Prohibited Transactions).
Responsibilities of the Secretary of the Treasury: The Secretary of the Treasury is responsible for communicating with Congress and the public, cooperating with other government agencies in consultation, studying the impact of this order, and conducting investigations into violations.
Project Development: After one year, the Minister of Finance should assess whether the relevant regulations need to be amended and regularly check the effectiveness of the regulations.
REPORTING TO THE PRESIDENT AND CONGRESS: The Secretary of the Treasury shall report to the President on the effects of the implementation of this order and on any recommended changes. At the same time, the Secretary of the Treasury has the authority to submit a report on this order to Congress.
Covered national security technologies and products: sensitive technologies and products in the fields of semiconductors and microelectronics, quantum information technology and artificial intelligence.
U.S. Government Direction: Nothing in this order prohibits official business transactions by U.S. Government officials, grantees, or contractors.
Confidentiality: Provisions shall be made to ensure the confidentiality of information or documentation submitted pursuant to this Order.
OTHER NOTICES AND INSTRUCTIONS: Any conspiracy and conduct designed to violate this order is prohibited. Any action taken to avoid this order or any provision issued pursuant to this order is prohibited. In addition, Treasury Department regulations may require a U.S. person to notify any transaction by a foreign entity controlled by such a U.S. person, which, if conducted by a U.S. person, would be a notified transaction.
Definitions: This section provides definitions for the terms "State of Concern," "Covered Alien," and "Covered National Security Technology and Products." Among them, "country of concern" refers to the countries or regions listed in the attachment, which the President has determined to be conducting a comprehensive, long-term strategy; People who care about the country's national security technology and product-related activities; products cover sensitive technologies and products in the fields of semiconductors and microelectronics, quantum information technology and artificial intelligence.
General Provisions: Determines the powers and duties of the Minister of Finance and states the scope of application of the Order.
Notably, the order restricts certain transactions with certain foreign entities, particularly those involving what is defined as "covered national security technologies and products." In the terms, there are six mentions of "investment", 26 mentions of "products", and several mentions of "as appropriate". Therefore, this executive order reflects more transaction measures, and the relevant restrictive investment clauses are more serious than previously reported. cautious.
According to the official website of the U.S. Department of the Treasury, the detailed measures of the U.S. foreign investment review executive order signed by Biden will be announced within 45 days, and the final bill is expected to be implemented next year.
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