US-China tech war: Treasury official says outbound investment review will be ‘narrow and tailored’

Semiconductors, AI and quantum computing among targeted sectors, with aim of restricting flow of US investment dollars ‘that comes with know-how’

Senate testimony by Treasury’s point person on investment security builds on earlier reports that military and dual-use tech were focus areas

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The US Treasury Department would play a leading role in an outbound investment review process meant to keep sensitive technologies out of the hands of “countries of concern”. Photo: Bloomberg

Published: 6:20am, 1 Jun 2023

The Biden administration is focused on a “narrow and tailored” approach in establishing a programme to review outbound investments, a senior Treasury official said on Wednesday at a hearing of the Senate Banking Committee.

Advanced semiconductors, artificial intelligence and quantum computing are among the sectors the administration plans to target, according to Paul Rosen, assistant secretary for investment security at the Treasury Department.

The programme would focus on restricting the flow of US investment dollars “that comes with know-how and expertise”, Rosen added.

Until now, administration officials had offered little detail about the types of investments and sectors the programme would target. That led observers to question whether it would cover any form of passive investment as opposed to prioritising non-passive private equity and venture capital investments.

Questions are also coming from Congress. Last week, Patrick McHenry, Republican of North Carolina and House Financial Services committee chairman, sent a letter to US Treasury Secretary Janet Yellen requesting information on why outbound investment restrictions would be more effective than export controls or sanctions.

McHenry argued such restrictions would advance Beijing’s goals of limiting the influence of Western firms in Chinese markets.