For semiconductors, quantum computing, and artificial intelligence! The U.S. introduced new rules to restrict investment in China's high-tech industry

Globe.com

2024-06-24 06:44Posted on the official account of Shaanxi Global Network

The U.S. Treasury Department released a 165-page draft on the 21st, intending to restrict investment in China's high-tech industry. Foreign media speculate that the investment restrictions on China signed by US President Joe Biden may take effect before the end of this year. Domestic experts believe that Washington's move will accelerate the "decoupling and breaking of the chain" of the United States in the high-tech field with China, but it will also stimulate China's determination to strengthen independent scientific and technological innovation.

On May 11, a large-scale quantum cloud computing power cluster was exhibited at the Zhongguancun Exhibition Center in Beijing. (Visual China)

Semiconductors and microelectronics, quantum information technology, artificial intelligence

The draft released by the U.S. Treasury Department on Friday, called the "Proposed Rulemaking Notice" (NPRM), aims to restrict U.S. entities from investing in China in three high-tech fields: semiconductors and microelectronics, quantum information technology, and artificial intelligence, and lays out detailed regulations. On August 10 last year, Biden signed an executive order requiring restrictions on U.S. investment in China in these areas and ordering the U.S. Treasury Department to formulate implementable policy measures. According to last Friday's statement, the U.S. Treasury Department will further solicit public comments to publish the final implementation rules and effective date after the August 4 deadline.

According to Bloomberg, the draft focuses on curbing China's ability to gain further development in the fields of semiconductors, quantum computing and artificial intelligence. The U.S. Treasury Department said its proposed new rules would restrict foreign investment in technologies that are critical to "next-generation military, intelligence, surveillance, or cyber capabilities." According to Bloomberg, this draft shows that Washington is increasingly focusing on artificial intelligence. A senior U.S. Treasury official declared on a conference call that the U.S. government wants to block China from developing artificial intelligence applications that could be used to locate weapons or track their location.

According to Singapore's Lianhe Zaobao, according to the U.S. Treasury Department, restricted investments include equity investments, convertible debt financing, greenfield investments, and capital contributions as limited partners. Violators may be subject to criminal and civil penalties.

The New York Times article claims that the draft is aimed at curbing new U.S. investment in China's key technology industries, which could be used to bolster China's military capabilities. At the same time, the newspaper said that the US government's approach has further intensified economic relations with Beijing at a time when trade tensions are rising.

China's "decoupling and breaking the chain" of the United States is strongly opposed by China

Prior to Biden's executive order, the U.S. Senate and House of Representatives had repeatedly pushed for legislation to restrict investment in China, but there were many differences. Zhang Qiuju, a researcher at the Institute of Science and Technology Strategy Consulting of the Chinese Academy of Sciences, analyzed in a signed article that Biden's Democratic Party cannot fully control the two houses, and in order to continue to promote investment review, it can only bypass Congress by signing an executive order by the president to achieve restrictions on investment in China. The U.S. Department of the Treasury, the main executive department of the executive order, issued an "Advance Notice of Proposed Rule" (ANPRM) on the day Biden signed the executive order, and began to solicit comments from enterprises and the public to draft the detailed rules.

The U.S. technology bullying has repeatedly met with strong opposition from China. China's Ministry of Commerce stated on August 10 last year that the US restricts its own enterprises' overseas investment and engages in "decoupling and chain breaking" in the investment field under the guise of "de-risking", which seriously deviates from the principles of market economy and fair competition that the US has always advocated, affects the normal business decision-making of enterprises, undermines the international economic and trade order, and seriously disrupts the security of global industrial and supply chains. On the same day, the Chinese Foreign Ministry said that China is strongly dissatisfied with and resolutely opposes the US side's insistence on introducing investment restrictions on China, and has lodged solemn representations with the US side.

Expert: Stimulate the internal motivation of China's independent innovation

Although the U.S. Treasury Department did not give a specific date for the implementation of the rules, a number of foreign media expect that the U.S. investment restriction order on China, which has been brewing for many years, may be implemented by the end of this year.

According to a previous report by Bloomberg, US Treasury Secretary Janet Yellen claimed last year that "these controls will not broadly affect US investment in China" because the restrictions are "narrowly targeted" and will focus on "several industries, particularly semiconductors, quantum computing and artificial intelligence". According to data released by Rhodium Consulting last year, since 2019, U.S. investment in China has fallen to an average of $10 billion per year, compared with $14 billion from 2005 to 2018. In 2022, U.S. venture capital investment in China fell to $1.3 billion, a 10-year low.

Zhou Mi, a researcher at the Research Institute of the Ministry of Commerce, told the Global Times on the 23rd that the latest measures of the United States mean that the United States restricts China's development, from export controls to investment restrictions, which will accelerate its further "decoupling and breaking the chain" of China in the high-tech field. He believes that the US practice of restricting investment will interfere with the normal economic, trade, and investment activities between Chinese and US enterprises, undermine the normal scientific and technological exchanges between China and the United States, undermine the global environment for the development of science and technology, and damage the momentum of global innovation.

In addition, there is an opinion in the industry that the US approach may have a demonstration effect or stimulate US allies to accelerate investment restrictions on China.

However, U.S. restrictions on investment in China will not limit China's scientific and technological development, but will further stimulate and strengthen China's internal motivation to rely on its own strength to carry out scientific and technological innovation. Xiang Ligang, chairman of the Zhongguancun Information Consumption Alliance, told the Global Times that the United States will limit the suppression policy to these three areas, so that China can more clearly understand that cutting-edge technologies such as semiconductors, quantum computing and artificial intelligence will form the underlying support for the development of strategic emerging industries in the future, so it is more necessary to work hard in these areas and solidly promote independent innovation.

Xiang Ligang said: To develop high technology, China naturally needs the participation of international funds, but it mainly relies on the support of China's domestic capital and policy environment. Recently, China issued the "Several Policies and Measures to Promote the High-quality Development of Venture Capital" to increase support for scientific and technological innovation in venture capital, equity investment, and enterprise restructuring. Xiang Ligang said that this reflects the country's determination to cultivate and develop new quality productive forces and achieve high-level scientific and technological self-reliance and self-reliance, and will further stimulate the R&D vitality of all links of China's high-tech industry and continuously make breakthroughs in core technologies.

At the 2024 Beijing Zhiyuan Conference held recently, in response to a question from the Global Times reporter, will the U.S. technological blockade of Chinese artificial intelligence and other fields have a further impact on domestic artificial intelligence research and development? Some experts said that "there will definitely be an impact", but relevant domestic companies have been working hard to build an ecology in the field of artificial intelligence, including the underlying infrastructure, etc., "I believe that after a period of time, we can establish a completely autonomous ecology." ”

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