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US-China tech war
TechTech War

Tech war: new US investment curbs to have limited impact on China’s targeted semiconductors, quantum computing and AI sectors, analysts say

  • US firms’ investment in China’s semiconductors, quantum computing and AI sectors make up ‘a relatively small portion of deal activity’
  • America’s investment in China’s chip sector, for example, has gradually dried up since 2019

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The Biden administration’s new executive order restricting US investment in China’s semiconductors, quantum computing and artificial intelligence sectors underscore the escalating tensions between Beijing and Washington. Image: Shutterstock
Ben Jiangin BeijingandChe Panin Wuxi, China
New American investment restrictions overseas under US President Joe Biden’s latest executive order are expected to have a limited impact on the targeted tech sectors in China, according to analysts, although it could disrupt the flow of fresh funds to the country’s private sector amid a weakening economic recovery.
The executive order issued on Wednesday restricts US venture capital and private equity investments in Chinese companies involved in semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems, according to a fact sheet released by the US Department of Treasury, the agency tasked to implement a new national security programme based on that directive.
The Biden administration identified mainland China, including the special administrative regions of Hong Kong and Macau, as “a country of concern” in the executive order. It said China was “exploiting, or has the ability to exploit, US investments to further its ability to produce a narrow set of sensitive technologies critical to military modernisation”.
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That directive, however, was “more smoke than actual fire” because it only “regulates US investment in a small number of tech sectors”, said Brock Silvers, chief investment officer at private equity firm Kaiyuan Capital in Hong Kong.

US President Joe Biden issued on August 9, 2023, an executive order targeting three tech sectors in China, which it described as developing and exploiting “sensitive or advanced technologies and products critical for military, intelligence, surveillance or cyber-enabled capabilities”. Photo: AP
US President Joe Biden issued on August 9, 2023, an executive order targeting three tech sectors in China, which it described as developing and exploiting “sensitive or advanced technologies and products critical for military, intelligence, surveillance or cyber-enabled capabilities”. Photo: AP

“China can expect this long-awaited executive order to be fairly unobtrusive,” Silvers said.

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While Biden’s new directive underscored the escalating tensions between Beijing and Washington, some Chinese investors downplayed the impact of new US investment curbs on funding for the targeted China tech sectors.

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