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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
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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
US-China relations
Bochen Han
Bochen Hanin Washington
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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.

In March, both Treasury and Commerce sent reports to Congress describing plans to establish a programme addressing outbound investments in “sensitive” technologies that could further the capabilities of US adversaries and threaten national security.

Without naming sectors, the reports stated the administration would focus on investments that “could result in the advancement of military and dual-use technologies by countries of concern”. They also said Treasury would lead in administering the programme, supported by Commerce and other federal agencies.

Experts urge caution as US plans to screen outbound investment into China

“We don’t have an effective tool to target the money and sophistication with know-how that goes into these sensitive and most critical technologies [in] countries of concern,” Rosen said on Wednesday, emphasising that “we are focused on being narrow and tailored”.

Some observers have likened such a programme to a “reverse CFIUS”, referring to the inter-agency Committee on Foreign Investment in the United States charged with reviewing inbound foreign investment.

In April during testimony on the Biden administration’s 2024 budget before the House Appropriations Committee, Commerce Secretary Gina Raimondo highlighted a request for US$5 million dollars for her department to scope and implement a “meticulously calibrated” programme for outbound investment.

Rosen did not specify a timeline for an announcement about the programme. But he said the administration was working with external stakeholders, including US allies, to ensure the result “takes into account any potential unintended consequences”.

US advisory panel signals support for screening investments in Chinese tech

Group of 7 leaders in May said in a joint statement that “we recognise that appropriate measures designed to address risks from outbound investment could be important to complement existing tools of targeted controls on exports and inbound investments”.
Such an announcement from the US would follow a string of moves made in recent months to restrict the provision of advanced US technology to China.

It would also come on the heels of bipartisan legislation in Congress that appears to seek a broader mechanism restricting outbound investment.

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