The U.S. government plans to further expand the restrictions on investments in China, including reviewing areas such as biotechnology. In response, the Chinese Ministry of Commerce has expressed serious concern and firm opposition, urging the U.S. to stop generalizing concepts of national security and to stop politicizing and militarizing economic and trade issues.
According to a report by Reuters on October 24, the US Department of Treasury recently announced new proposed rules for foreign investment restrictions, aiming to expand investment restrictions in high-tech fields in countries like China. The new regulations not only cover traditional areas such as semiconductors, artificial intelligence, and quantum information technology, but also include biotechnology, high-performance computing, supercomputing, and hypersonic systems within the scope of regulation.
On the 24th, a spokesperson for the Chinese Ministry of Commerce stated in response to reporters' questions that the proposed rules are discriminatory in expanding the restrictions on investment in China, and they impose more stringent restrictions. These measures represent a typical approach of generalizing national security concerns, violate the important consensus reached by the two heads of state, interfere with normal economic and trade cooperation between Chinese and American enterprises, and undermine the international economic and trade order.
The spokesperson emphasized that China expresses serious concern and firm opposition to this situation. China will closely monitor the subsequent development of the situation and retains the right to take appropriate measures.
China possesses a massive market with immense consumption and investment potential, making investment in China an investment in the future. The speaker pointed out that restrictions on US investment in China are not only detrimental to bilateral economic cooperation but also harmful to the interests of American businesses themselves.
China urges the US to respect the laws of a market economy, stop generalizing the concept of national security, and stop politicizing and weaponizing economic and trade issues, in order to create a favorable environment for Sino-US economic and trade cooperation.
According to a notice issued by the US Treasury on October 22, the proposed rules are intended to implement the Comprehensive Foreign Investment National Security Act passed by the US Congress, and to further adjust the current foreign investment security review mechanism.
The current American mechanism will come into effect officially in January 2025. It primarily targets certain investment transactions in semiconductors, microelectronics, quantum information technology, and artificial intelligence fields by individuals and companies in China and other so-called “focused countries”. Such transactions are subject to investment bans or reporting requirements.
The proposed rules further expand the areas subject to regulation. In addition to existing technologies, the US also intends to include high-performance computing, supercomputing, hypersonic systems, and biotechnology under related restrictions.
The U.S. Treasury Department states that these measures are intended to prevent American capital from assisting so-called “foreign adversaries” in developing technologies that could threaten U.S. national security.
U.S. Treasury Secretary Steven Mnuchin said that the new regulations will strengthen existing mechanisms for ensuring the security of foreign investments, preventing U.S. investments from being used to develop technologies that could threaten U.S. national security.
However, these regulations are currently in the phase of soliciting feedback and have not been officially implemented yet. The U.S. Treasury will develop the final rules based on public feedback and will determine the effective date separately.
It is noteworthy that while expanding investment restrictions in the high-tech sector, the U.S. government has also signaled a desire to continue maintaining some easing measures regarding trade and economics with China.
According to a report by S&P Global on October 23rd, the U.S. Office of the Trade Representative has proposed extending the suspension period for measures related to China's maritime transport, logistics, and shipbuilding industries under the 301 investigation by another two months, until January 9th, 2027.
According to the arrangements announced by the U.S. Trade Representative Office, the related measures were originally scheduled to be suspended until November 9, 2026. This proposed extension means that the charging measures related to ships owned or operated by Chinese companies, as well as ships built in China, may continue to be postponed.
The U.S. Trade Representative Office stated in its notice that the United States will continue to engage with China and hopes to resolve the issues involved in the related investigations through consultations. Therefore, it has proposed extending the suspension of the measures by another two months.
This proposal for postponement is not yet finalized. The US side is seeking public opinions, with a deadline of October 30.
On one hand, the US intends to expand investment restrictions on China's high-tech sectors. On the other hand, it seeks to extend the suspension period for certain trade measures related to maritime transport and shipbuilding industries in China. These two latest policy developments indicate that US economic and trade policies towards China still have different orientations: they aim to strengthen technical investment regulations while maintaining some space for trade negotiations.
