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    Biden’s China investment ban: who’s targeted and what does it mean for the 2024 US election?

    Joe Biden has moved to restrict US investment in Chinese technology, signing an executive order which focuses on a few, sensitive hi-tech sectors including semiconductors, quantum computing and artificial intelligence (AI).It is the latest in a series of measures taken by the US to restrict China’s access to the most advanced technology and comes as the president has embarked on a multi-state tour of the south-west to tout his plans to revive American manufacturing after decades of decline.The restrictions are expected to take effect next year – and come at a sensitive time in the US-China relationship. The Biden administration has launched diplomatic overtures to Beijing in recent months, seeking to mend ties after a series of incidents, while still attempting to bolster its position against China on military, economic and technological fronts.What are the latest restrictions?As a result of previous Biden administration measures, the US already bans or restricts the export to China of many of the technologies covered in these new measures. The aim of Wednesday’s executive order is to prevent US funds from helping China build its own domestic capabilities, which could undermine the existing export controls.Under the executive order, the US Treasury has been directed to regulate certain US investments in semiconductors and microelectronics, quantum computing and artificial intelligence.China, Hong Kong and Macau are listed as the “countries of concern”, but a senior Biden official has told Reuters other countries could be added in the future.The rules are not retroactive and apply to to future investments, with officials saying the goal is to regulate investments in areas that could give China military and intelligence advantages.Britain and the European Union have signalled their intention to move along similar lines, and the Group of Seven advanced economies agreed in June that restrictions on outbound investments should be part of an overall toolkit.Biden’s plan has been criticised by Republicans, many of whom say it does not go far enough.Republican Senator Marco Rubio has called it “almost laughable”, adding that the plan is “riddled with loopholes … and fails to include industries China’s government deems critical”, he said.How has China reacted?A spokesperson for the Chinese embassy in Washington said the White House had ignored “China’s repeated expression of deep concerns” about the plan.The embassy warned that it would affect more than 70,000 US companies that do business in China, hurting both Chinese and American businesses.The country’s commerce ministry said it reserved the right to take countermeasures and encouraged the US to respect the laws of market economy and the principle of fair competition.What part do these measures play in Biden’s re-election bid?As the executive order was made public, Biden was speaking in New Mexico, touting his government’s success in boosting manufacturing jobs in the renewable energy sector.“Where’s it written that America can’t lead the world again in manufacturing? Because we’re going to do just that,” Biden said at the groundbreaking of a new factory manufacturing wind turbine towers in the city of Belon.“Instead of exporting American jobs, we’re creating American jobs and we’re exporting American products,” he added.However, polling shows that for many, the perception of the president’s economic policies – “Bidenomics” as his communications team likes to call them – are at odds with a range of positive indicators. US inflation has dropped to the lowest levels since 2021 and the administration has repeatedly touted months of consistent jobs growth; despite this though multiple polls show that only a minority of Americans support Biden’s handling of the economy.The cornerstone of Biden’s refreshed bid to voters are two major bills he shepherded through Congress and signed into law a year ago: the Chips and Science Act – which pumps huge funding into semiconductor manufacturing, research and development – and the Inflation Reduction Act (IRA), a law for megaprojects boosting green investment.The chips act aims to further freeze China’s semiconductor industry in place, while pouring billions of dollars in subsidies into the US chip industry.Both laws, along with the growing restrictions on Chinese industry, are positioned to win back portions of the working-class vote who felt left behind by globalisation and turned to Donald Trump at previous elections.What’s next?The ban is a step in a broad and ongoing push to undermine China’s efforts to achieve independence in a number of technological areas, in particular the development of advanced semiconductors.In recent months, the US government has signalled it still wants to close some loopholes Chinese businesses are using to get their hands on the most advanced semiconductors.In response to previous chip bans, Nvidia one of the world’s leading chip companies, has started offering a less advanced chip, the A800, to Chinese buyers. But new curbs being considered by Washington would restrict even those products.In possible anticipation of such a move China’s tech giants – including Baidu, TikTok-owner ByteDance, Tencent and Alibaba – have made orders worth $1bn to acquire about 100,000 A800 processors from the Nvidia to be delivered this year, the Financial Times has reported.The Chinese groups had also bought a further $4bn worth of graphics processing units to be delivered in 2024, according to the report.Reuters and Agence France-Presse contributed to this report More

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    US Senate approves $50bn boost for computer chip and AI technology to counter China

    The US Senate has overwhelmingly approved a bill to boost American semiconductor production and the development of artificial intelligence and other technology in the face of growing international competition, most notably from China.The 68-32 vote for the bill on Tuesday demonstrates how confronting China economically is an issue that unites both parties in Congress. It is a rare unifying issue in an era of division as pressure grows on Democrats to change Senate rules to push past Republican opposition and gridlock.The centerpiece of the bill is a $50bn emergency allotment to the US commerce department to boost semiconductor development and manufacturing through research and incentive programs previously authorised by Congress. Overall, the bill would increase spending by about $250bn, with most of the spending occurring in the first five years.The bill now heads to the House of Representatives, which earlier passed a different version. The two will have to be reconciled into a single bill before it is sent to the White House for the president’s signature.Joe Biden said he was “encouraged” by the Senate’s passage of the United States Innovation and Competition Act.“We are in a competition to win the 21st century, and the starting gun has gone off,” Biden said.“As other countries continue to invest in their own research and development, we cannot risk falling behind. America must maintain its position as the most innovative and productive nation on Earth.”Supporters described the bill as the biggest investment in scientific research that the country has seen in decades. It comes as the nation’s share of semiconductor manufacturing globally has steadily eroded from 37% in 1990 to about 12% now, and as a chip shortage has exposed vulnerabilities in the US supply chain.“The premise is simple, if we want American workers and American companies to keep leading the world, the federal government must invest in science, basic research and innovation, just as we did decades after the second world war,” said Senate majority leader, Chuck Schumer.“Whoever wins the race to the technologies of the future is going to be the global economic leader, with profound consequences for foreign policy and national security as well.“If we do nothing, our days as the dominant superpower may be ending. We don’t mean to let those days end on our watch. We don’t mean to see America become a middling nation in this century.”The bill has a number of other China-related provisions, including prohibiting the social media app TikTok from being downloaded on government devices, and would block the purchase of drones manufactured and sold by companies backed by the Chinese government.It would also allow diplomats and Taiwanese military to display their flag and wear their uniforms while in the US on official businesses, and creates broad new mandatory sanctions on Chinese entities engaged in US cyberattacks or theft of US intellectual property from US firms. It provides for a review of export controls on items that could be used to support human rights abuses.The Senate minority leader, Mitch McConnell, backed the bill but said it was incomplete because it did not incorporate more Republican-sponsored amendments.“Needless to say, final passage of this legislation cannot be the Senate’s final word on our competition with China,” he said. “It certainly won’t be mine.”Senators slogged through days of debates and amendments leading up to Tuesday’s final vote. Schumer’s office said 18 Republican amendments will have received votes as part of passage of the bill. It also said the Senate this year has already held as many roll call votes on amendments than it did in the last Congress, when the Senate was under Republican control.While the bill enjoys bipartisan support, a core group of Republican senators has reservations about its costs.One of the bill’s provisions would create a new directorate focused on artificial intelligence and quantum science with the National Science Foundation. The bill would authorize up to $29bn over five years for the new branch within the foundation, with an additional $52bn for its programs.Rand Paul, a Republican senator for Kentucky, said Congress should be cutting the foundation’s budget, not increasing it. He called the agency “the king of wasteful spending”. The agency finances about a quarter of all federally supported research conducted by America’s colleges and universities.The lead Republican on the committee also weighed in to support the bill.“This is an opportunity for the United States to strike a blow on behalf of answering the unfair competition that we are seeing from communist China,” said Roger Wicker.Senators have tried to strike a balance when calling attention to China’s growing influence. They want to avoid fanning divisive anti-Asian rhetoric when hate crimes against Asian Americans have spiked during the coronavirus pandemic.Senators added provisions that reflect shifting attitudes toward China’s handling of the Covid-19 outbreak. One would prevent federal money for the Wuhan Institute of Virology as fresh investigations proceed into the origins of the virus and possible connections to the lab’s research. The city registered some of the first coronavirus cases. More