US Lawmakers Urge Swift Action: Republican and Democratic chairs of a Senate committee on China have urged Treasury Secretary Janet Yellen to quickly curb outbound Chinese investments. They worry that China is leveraging American funds to enhance its technology, especially as the Treasury Department considers additional laws.
President Joe Biden issued an executive order in August allowing the Treasury secretary to limit or ban U.S. investments in Chinese semiconductor, microelectronics, quantum information, and artificial intelligence companies. The Treasury will adopt these limits next year as it refines its guidelines to prevent American money and knowledge from supporting China’s military expansion.
While China has criticized these measures, some U.S. lawmakers argue that they contain too many loopholes. The leaders of the House of Representative’s select committee on China, Mike Gallagher (Republican) and Raja Krishnamoorthi (Democrat), have expressed their concerns in a letter.
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They urge Secretary Yellen to adopt a broad definition of technology in the guidelines for investment restrictions, emphasizing that China has blurred the lines between commercial and military technology.
Gallagher and Krishnamoorthi argue that China may attempt to evade narrowly defined restrictions, so they advocate against allowing “excepted transactions” that could dilute the effectiveness of the rules. They call for Treasury to collaborate with U.S. authorities to enforce stringent penalties for violations and address passive flows of U.S. capital, including those through public markets and mutual funds.
While some U.S. officials believe that outbound investment rules should be manageable to avoid harming the U.S. economy, others, including former Biden administration officials, consider this a positive first step and believe that Congress should allocate resources to expand these measures.