President Joe Biden’s executive order aimed at barring some investments into China’s tech industry is drawing mixed responses from experts and lawmakers.
Some China hawks believe the order doesn’t address critical vulnerabilities in U.S.-China trade relations, while others have hailed the order as a landmark move against a hostile regime.
Rep. Mike Gallagher (R-Wis.), who chairs the House Select Committee on the Chinese Communist Party (CCP), is among the former.
“President Biden’s long-awaited executive order is a small step in the right direction, but the loopholes are wide enough to sail the [CCP’s] Navy fleet through, and it doesn’t address the passive flows of U.S. money into malign CCP-affiliated companies,” Mr. Gallagher said in a prepared statement.
Too Tough for CEOs, Too Soft for Congress
President Biden’s executive order, signed on Aug. 9, declares a national emergency regarding the “unusual and extraordinary threat” posed by “countries of concern” that are using U.S. investments into critical technologies to advance their own domestic military and intelligence capabilities.
It also grants authority to the Secretary of the Treasury to bar investments into artificial intelligence (AI), quantum information technology and semiconductor and microelectronics manufacturing if such an investment is deemed to benefit the military modernization of such a nation.
The treasury simultaneously released a notice of proposed rules and sought public comment related to the implementation of the order, which will begin a lengthy comment period before the Treasury formally adopts the new rules sometime within the next year.
Emily Kilcrease, a senior fellow at the Center for a New American Security (CNAS) think tank, said that President Biden’s carefully tailored order would do much to craft meaningful and enforceable rules with which to slow China’s military modernization.
“The administration is trying to throw a pitch straight down the middle, and with this EO, they have largely succeeded,” Ms. Kilcrease said in a statement to the press. “The scope hits on those transactions that present high national security risk, without burdening agencies with a program that is too big to properly enforce.”
With that being said, Ms. Kilcrease added, the order’s limited, middle-of-the-road approach would likely draw pushback from both sides of the China debate as Congressional hawks seek greater decoupling from China’s economy and industry leaders seek more engagement.
Role of Treasury Department Scrutinized
Other analysts, meanwhile, are raising concerns with the administration’s decision to allow the Treasury Department to lead the terms of the competition with China.Bradley Thayer, director of China policy at the Center for Security Policy think tank, said that the move could easily result in lax rules intended to ease potential costs on investors.
“In some respects, you’re having the fox guard the henhouse when you’re having Commerce or Treasury, who have a vested interest in advancing American businesses and American trade [do this job],” Mr. Thayer told NTD, sister media outlet of The Epoch Times.
“It would be far better if there were direct oversight from the national security side, rather than those whose principal responsibility is to facilitate trade.”
To that end, Department of Defense Press Secretary Gen. Pat Ryder said during an Aug. 10 press conference that the DoD had played a “key role” in the interagency process which suggested the initial ruleset proposed by the administration.
Still, Mr. Thayer said, while President Biden’s order presents real progress on how the administration is handling the competition with the CCP, its scope would need to be expanded to be truly effective.
“It’s a positive step,” Mr. Thayer said. “[It’s] limited, but it’s a positive step to keep those commanding heights of technology.”
“I very much agree with Representative Gallagher’s remarks that this has to be ironclad. And it also has to be broadened into other areas as well.”
John Hughes, an adjunct senior fellow at CNAS, said that such a broadening was certainly in the realm of possibility, and that the Treasury’s long comment period will likely see the proposed rules for investment greatly changed as new problems arise.
“This approach reflects a balancing act between wanting to have impact while not unnecessarily limiting broader investments,” Mr. Hughes said in a press statement.
A Glancing Blow to China’s Military Modernization
In all, the Biden administration’s new push to curtail Chinese military development is only in its earliest stages but may still prove effective at bolstering U.S. national security against the CCP.“All military equipment now, even non-military equipment like toasters, computers, everything is reliant on computer chips that make decisions based on sensors that the machine has access to,” Mr. Corr said during an Aug. 10 interview with NTD.
“Without access to those computer chips, China’s military is at a disadvantage, its economy is at a disadvantage, [and] its manufacturing sector is at a disadvantage.”
Still, while Mr. Corr believed President Biden’s order would be “something of a blow” to the CCP, he said there remained concerns over the lack of transparency from the regime about its role in the Chinese economy.
There is little to prevent the regime, he said, from redirecting allegedly non-military companies in China to contribute to its defense program. In this way, the CCP might continue to garner massive investments in the Chinese stock market from American investors without those investors ever knowing that their money is being leveraged for military gain.
“This is the problem with the complete opaqueness of China’s economy to foreign investors now with the new national security laws, because we just can’t tell what we’re investing in,” Mr. Corr said. “So these so-called targeted sanctions and targeted restrictions really aren’t very effective at controlling money flows.”
