Biden Signs Executive Order Blocking Foreign Investments in US Technology

President Joe Biden speaks before boarding Air Force One in Columbus, Ohio, on Sept. 9, 2022. Manuel Balce Ceneta/AP Photo

President Joe Biden signed an executive order on Sept. 15 that bolsters a regulatory panel’s ability to scrutinize and act on foreign investments in areas that are deemed critical for the U.S. economy.

While the order doesn’t directly mention the Chinese regime, it comes amid growing concern among U.S. officials about China’s investments in the U.S. technology sector and other industries. It tells the federal Committee on Foreign Investment in the United States (CFIUS) to review cases involving “microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy, and climate adaptation technologies.”

The CFIUS interagency group is tasked with reviewing deals and mergers involving foreign people and entities. The committee sends its findings and a recommendation to the president, who has the power to suspend or prohibit a deal.

The committee includes members of the departments of State, Defense, Justice, Commerce, Energy, and Homeland Security and is led by the Treasury secretary. It sends its findings and a recommendation to the president, who has the power to suspend or prohibit a deal.

“Although foreign investments can in many circumstances help to foster domestic innovation, it is vital to protect U.S. technological leadership, especially when foreign investments involve sectors that are critical to U.S. national security,” a White House fact sheet states.

The order calls for CFIUS to weigh whether a foreign investment or sale could affect the resilience of critical U.S. supply chains and the impact it could have on U.S. technological leadership in areas affecting U.S. national security and on broader investment trends.

Data Risk

And it will also be tasked with reviewing foreign acquisitions of companies over concerns an investor could gain control over a certain technology sector or if investments could pose a cybersecurity risk.

“Data is an increasingly powerful tool for the surveillance, tracing, tracking, and targeting of individuals or groups of individuals, with potentially adverse impacts on national security,” the order said, saying that the committee has to now “consider whether a covered transaction involves a U.S. business with access to U.S. persons’ sensitive data, and whether the foreign investor has, or the parties to whom the foreign investor has ties, have sought or have the ability to exploit such information.”

In recent years, lawmakers have expressed concern that Chinese companies have exploited areas in U.S. law to gain access to sensitive technology or steal intellectual property.

Chinese investors have dumped billions of dollars into the U.S. technology sector, According to a 2017 Council on Foreign Relations report. In 2010, around $5 billion was invested by Chinese individuals; that figure skyrocketed to more than $180 billion in 2016, the report found.

Meanwhile, an annual Treasury Department report released in August showed Chinese investors more than doubled the number of applications they filed in 2021 seeking U.S. regulatory clearance for proposed deals.

“President Biden’s executive order highlights CFIUS’s increasing attention to national security risks in several key areas and sharpens the committee’s focus on protecting America’s national security, while maintaining the U.S. open investment policy,” Treasury Secretary Janet Yellen said in a Sept. 15 statement. “Strengthening our supply chains and protecting against foreign threats enhances our national security, and this executive order highlights CFIUS’s important role in that work.”

The Associated Press contributed to this report.