Biden issues fresh directive to limit Chinese involvement in US tech. Tensions between Washington and Beijing are expected to rise after signiing an executive order by Biden on Thursday intended to give the government more authority to prevent Chinese investment in technology in the United States and limit its access to private data.
Biden Issues New Order to ban Chinese Tech Involvement
The Committee on Foreign Investment in the United States was founded by Congress about fifty years ago, and its activities are the target of the new regulation. For a long time, the committee’s authority was restricted to stopping foreign acquisitions of U.S. enterprises with a direct impact on national security, such as military contractors.
Perhaps the most far-reaching and consequential aspect of Mr. Biden’s new order is his instruction to the committee to investigate whether or not a proposed transaction involves the acquisition of a business with access to sensitive data on Americans and whether or not foreign Companies or governments can use this information.
The language reflects growing unease about China’s ability to access personal information Americans provide to mobile apps and other services. The committee, known by its acronym CFIUS, is already believed to be reviewing TikTok, a popular Chinese-owned video app that critics fear could expose its user data to the Chinese government.
Biden administration has said little about its censorship of TikTok:
So far, the Biden administration has said little about its censorship of TikTok. In the final months of the Trump administration, TikTok’s US operations were hastily sold to a consortium of US and other Western companies; it quickly collapsed. The deal never addressed broader questions in the widening tech war between Washington and Beijing: What should the US do with foreign apps embedded in American smartphone screens and in the everyday fabric of American digital life?
Read more about Asia-US relations
In recent months, there has been evidence that TikTok employees in China have been able to access data about Americans who sign up for the service. There is no public evidence that the company has handed over the data to the Chinese government, but China’s national security law may require the company to do so. The question now is whether requiring all data to be transferred to servers in the US will solve the problem, or just alleviate it. Questions remain about who designed the algorithms that track Americans’ online interests and activities .
Chinese intelligence agencies have gone to great lengths to gain access to vast amounts of data on Americans, including hacking databases of the Office of Personnel Management during the Obama administration. Information on 22.5 million Americans applying for security clearances was in Chinese hands before US authorities found out. It has been unclear what China did with the data.
A concern for years has been China’s requirement for foreign companies:
The months-long executive order does not regulate “outbound investment” by US companies in foreign countries, although it seems likely that a Biden administration may also seek new powers to regulate that. A concern for years has been China’s requirement for foreign companies to include technology as part of the price of entering the Chinese market.
“For China, the job is about survival,” Nigel Inkster, the former director of operations and intelligence at Britain’s Secret Intelligence Service, wrote in the New York Times op-ed earlier this week. , describes covert operations by Chinese agents to acquire technology or manufacturing technology to speed Beijing’s pace. He noted a Chinese law requiring Chinese citizens to help intelligence agencies, often in secret.
The new order directs CFIUS to focus on specific types of deals that would give foreign powers access to technologies Mr. Biden believes are critical to US economic growth. That includes “microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy and climate-resilient technologies,” according to a White House brief.
While China is not specifically mentioned in the order, all of these areas are part of the “Made in China 2025” plan launched by President Xi Jinping seven years ago and are technology resources that the United States is now investing more in federally.
What White House officials believed?
In part, the presidential decree formalized a new, broader interpretation of the commission’s powers that has been in the works for several years. White House officials said they believed Mr Biden’s order to focus CFIUS on certain technologies would not require changes to its enabling law, which dates back to the group’s founding during the Gerald Ford administration.
For most of its history, CIFIUS has only reviewed a transaction in which a foreign company attempted to buy a controlling stake in a US company engaged in a sensitive technology transaction. It blocked several such sales, often because it concluded that the companies supplied weapons systems or products used by intelligence agencies. (DoD and intelligence officials are members of the committee.) In other cases, US companies have been asked to divest sensitive products or technologies before deals close.
But over time, it became clear that foreign companies did not need a majority stake in the company to gain access to key technologies. So over the past seven-plus years, the power of the cross-sector group has expanded significantly, and it can now block even a few investments. Part of the reason is concern that Chinese state-owned companies are setting up venture capital funds in Silicon Valley and beyond to gain early access to new technologies.
A White House statement said the new order would embody that approach, not focusing on the scale of investment but on the characteristics of the technology itself, including “technological advancements and applications that could undermine national security.”
With this potential, CFIUS members do not have to identify a technology that is currently critical to national security. For example, artificial intelligence software or quantum computers that can strongly encrypt or crack data could trigger government action to prevent the technology from falling into the hands of China or other competitors.
The order also empowers the committee to block any deal that “erodes US cybersecurity.” It also urged a review of “incremental investments in a sector or technology over time” that may “gradually relinquish domestic development or control of the sector or technology”.
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