The Biden Administration’s Executive Order on Outbound Investment in National Security Technologies
This week, the Biden administration issued an executive order limiting or banning US investment in China’s core high-tech sectors viewed as critical to US national security, namely semiconductors, quantum computing, and artificial intelligence. Unlike previous restrictions on trade with China that were limited to inbound investment into US firms through the CFIUS process, the new EO is the first limitation that the US has placed on outbound investment. The Biden administration, however, is trying to narrowly define the areas banned to avoid putting US firms at a competitive disadvantage with other countries who can—and will—continue to invest in these technologies.
The full implications of the EO still remain to be seen. Domestically, it is expected to be implemented by the Treasury just as the US 2024 presidential elections are heating up—in keeping with the bipartisan campaign theme of being “tough on China.” Globally, China has already labeled the action as “economic coercion” and is expected to retaliate, likely with their own outbound investment restrictions as well as limits on foreign investment in certain sectors in China.
For background on the executive order, key takeaways from the action, and implications for business, download EGA's quick take: The Biden Administration’s Executive Order on Outbound Investment in National Security Technologies.
