Technological cold war: USA says stop to progress of Chinese technology

The US government has not completed its mission to slow down China’s technological advances. According to the latest reports, President Joe Biden plans to sign a new decree that will restrict critical investments in China by mid-August. With this move, a new phase will be entered in the technology war.

technological cold war

Bloomberg reports that the new decree will primarily target areas where the US has previously tried to restrict China’s development: semiconductors, artificial intelligence and quantum computing. However, it is stated that the decision will not affect existing investments and will only prohibit certain transactions. New investments other than these will need to be disclosed to the US government.

Sources say the decision has been delayed several times before and there is no guarantee it won’t happen again. The restrictions won’t come into effect until next year and will go through a rulemaking process with a comment period for stakeholders to comment on the final version.

China may respond

The Chinese government said last month that it would retaliate if the Biden administration imposes new restrictions on technology and capital entering the country, but did not detail what steps it might take.

On the other hand, US Treasury Secretary Janet Yellen said the restrictions were narrow in scope and would not significantly harm China’s ability to attract US investments. Yellen also said the restrictions are not intended to slow China’s growth or retaliate for any specific action.

However, the previous statements made by the USA regarding the restrictions said the opposite. This is true not only in rhetoric, but also in practice. As we mentioned in our previous news on the subject, the US has also imposed numerous sanctions on the export of advanced chip manufacturing tools and has encouraged the Netherlands and Japan to do the same.

China has retaliated against US restrictions in the past. The country banned Micron chips in May, allegedly posing major security risks to China’s critical infrastructure supply chain, which includes state-owned banks, transportation and telecoms. Similarly, China has announced new controls on exports of critical metals in the semiconductor, telecommunications and electric vehicle industries, gallium and germanium, to US plans to further tighten export restrictions on artificial intelligence chips.