On August 9, 2023, President Biden issued an executive order that sets the stage for increased regulation of U.S. investments in China. The order directs the Department of the Treasury to develop new rules that will require U.S. investors to assess the risks of investing in Chinese companies that could be subject to government control or interference.

The order is a response to concerns that U.S. investments in China could be used to support the Chinese government’s military and intelligence activities, or to acquire sensitive U.S. technology. The order also reflects the Biden administration’s broader effort to compete with China on economic and technological terms.

The new rules that the Treasury Department is developing will likely focus on three key areas:

  • Risk assessment: The rules will require U.S. investors to assess the risks of investing in Chinese companies that could be subject to government control or interference. This could include companies that are owned or controlled by the Chinese government, or companies that operate in sensitive industries such as telecommunications or artificial intelligence.
  • Due diligence: The rules will require U.S. investors to conduct due diligence on Chinese companies before investing. This could include reviewing the company’s ownership structure, its business operations, and its compliance with U.S. laws and regulations.
  • Reporting: The rules will require U.S. investors to report their investments in Chinese companies to the Treasury Department. This will help the government to track the flow of capital between the two countries and to identify potential national security risks.

The new rules are expected to be released in the coming months. Once they are in place, they will have a significant impact on U.S. investments in China. Investors will need to carefully assess the risks of investing in Chinese companies and to conduct thorough due diligence before making any investments. The new rules will also make it more difficult for U.S. investors to acquire sensitive U.S. technology from Chinese companies.

The Biden administration’s executive order is a significant development in the U.S.-China economic relationship. It is a sign that the Biden administration is taking a tougher stance on China and that it is committed to protecting U.S. national security interests. The new rules will likely have a chilling effect on U.S. investments in China, but they could also help to level the playing field between the two countries and to protect U.S. technology from being stolen by the Chinese government.

Here are some of the key takeaways from the Biden administration’s executive order on U.S. investments in China:

  • The order is a response to concerns that U.S. investments in China could be used to support the Chinese government’s military and intelligence activities, or to acquire sensitive U.S. technology.
  • The order will likely lead to increased regulation of U.S. investments in China.
  • The new rules will require U.S. investors to assess the risks of investing in Chinese companies, conduct due diligence, and report their investments to the Treasury Department.
  • The new rules could have a significant impact on U.S. investments in China.
  • The order is a sign that the Biden administration is taking a tougher stance on China and that it is committed to protecting U.S. national security interests.