President Biden signed an executive order that confirms the U.S. governments plans to restrict critical investments in China. The purpose of this ban is to prevent China from using money from U.S. investors to improve its military, develop advanced weapons, and undermine U.S. security. The order allows the U.S. Treasury to limit or prohibit U.S. investment in three areas of Chinese development: artificial intelligence, semiconductors, and quantum computing.
The restrictions target private equity, venture capital, joint ventures, and greenfield investments. The introduction of these measures is expected to take place next year following multiple rounds of public comment, including an initial 45-day comment period. China has expressed its dissatisfaction with the new rules, stating that it is gravely concerned and reserves the right to take countermeasures. China believes that the U.S. order will undermine the international economic and trade balance, and harm the economic and commercial interests of American companies, too.
The Chinese embassy in Washington pointed said that over 70,000 U.S. companies conduct business in China. Nvidia, a major AI GPU manufacturer, has warned that stricter export restrictions on AI chips to China would negatively impact its future growth and potentially result in a permanent loss of opportunity for Nvidia to compete in one of the world’s largest markets. In response to the possibility of new limits on technology and capital entering the country, the Chinese government vowed to retaliate. This was evident when China announced controls on the export of gallium and germanium, which are vital components of the semiconductor, telecommunication, and electric vehicle industries.
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