US lawmakers push for limits on American investment in China tech

INTERNATIONAL DESK: U.S. lawmakers renewed calls Wednesday to pass bipartisan legislation that would restrict American investment in Chinese technology.

“It should come as no surprise that China’s military and surveillance state are exploiting loopholes in U.S. policy to access billions of U.S. investment dollars and expertise. We know that U.S. investment has not democratized China and countries which are controlled by the CCP [Chinese Communist Party] have no power over the applications of their technology. The CCP can direct it to us for military or surveillance purposes,” House Foreign Affairs Committee Chairman Michael McCaul said at a hearing on the legislation Wednesday.

The bill – which has support from both conservative organizations and the Biden administration – was not included in the National Defense Authorization Act or NDAA passed late last year. Republican Senator John Cornyn has sponsored companion legislation in the U.S. Senate that passed with more than ninety votes.

Lawmakers hope it can still be passed individually and signed into law.

If passed, McCaul said the measure, H.R. 6349, would target “specific technology sectors, like AI [artificial intelligence] and quantum computing, that are empowering China’s military development and surveillance.”

Rep. Gregory Meeks, the top Democrat on the House Foreign Affairs Committee, said an executive order issued by the Biden administration last August “that calls for provisions and notification requirements of specific types of American investments in China, or in certain companies that develop or produce semiconductors, quantum computers, and artificial intelligence applications” is an important first step.

But experts in U.S.-China relations told a House panel more could be done.

“Congress has an opportunity to build on the initial steps taken by the Trump and Biden administrations to prevent U.S. capital from fueling China’s military and intelligence capabilities. First, Washington should take a sectoral rather than merely an entity-based approach. The Treasury Department has demonstrated since at least 2021 that it is disinterested in using even its existing narrow authorities to limit investment in Chinese military-linked companies. And in fairness to the Treasury Department tackling the problem on a company-by-company basis would be a resource-intensive and gargantuan task,” Matthew Pottinger, the deputy national security adviser during the Trump administration, said Wednesday.

“We still haven’t learned that they will do everything they can to take anything we sell, particularly in the area of electronics and really high tech, and use it for the military. They’ve been doing that for decades. We don’t learn. We think somehow if you trade more, they’ll matriculate from dictatorship to democracy,” Republican Rep. Chris Smith said Wednesday.

The bipartisan push in the U.S. House comes as Senate negotiators continue work on the White House’s $106 billion national security supplemental request that includes funding to combat Chinese influence in the Indo-Pacific. Citing a border security crisis, Senate Republicans have sought changes to U.S. immigration law in return for their votes to pass more than $50 billion in assistance to Ukraine that is also part of the Biden administration’s request.

Senate Minority Leader Mitch McConnell urged lawmakers Wednesday to reach an agreement soon.

“It’s become quite fashionable in Washington to talk about how we’re not taking competition with China seriously enough,” McConnell said. “Winning this competition means credibly deterring Beijing’s worst impulses, which, for us, means investing in American strength. Outcompeting the PRC [People’s Republic of China] will require greater investments in our military capabilities and in our industrial capacity to produce them. The West cannot be caught unprepared for this challenge. We cannot afford to neglect the lessons of history.”