According to respected analyst Christopher Wood of Jefferies, the Joe Biden government in the US is ready to unveil additional limitations on US corporations' investments in China.
According to rumours, Biden plans to execute an executive order in the next weeks that would restrict American companies' ability to invest in China. According to reports, the executive order would include quantum computing, artificial intelligence, and semiconductors.
Some new investments in sectors that are important to the US economy will be prohibited, while other![]()
s will call for company notification to the US government. At the G7 summit in Japan, which starts on May 19, the US hopes to receive support from its G7 partners on such investment restraints, according to Wood.
By the end of 2021, US companies had made a total of $118 billion in direct investments in China, with $57 billion (or 48%) going to the manufacturing sector.
US Treasury Secretary Janet Yellen made an obvious effort to reach out in a speech on April 20. The US national security concerns, however, “are not designed for us to gain a competitive economic advantage, or stifle China's economic and technological modernization,” according to Yellen.
It was obviously a reference to the US Department of Commerce's stated policy to forbid the export of cutting-edge semiconductors to China.
Wood said that it seems from Beijing's perspective that Washington's national security lobby is specifically attempting to prevent China from modernising its economy, increasing the likelihood that it would fall into the feared middle-income trap given China's poor demographics.
Therefore, Yellen's tone should be commended as an effort to tone down recent rhetoric from individuals like National Security Advisor Jake Sullivan and Secretary of State Antony Blinken, who occasionally seem to be looking to pick a fight with China.
At best, Yellen's speech provided conflicting signals. In fact, Washington's “true intention is to deprive China of its development rights,” according to Wang Wenbin, a spokeswoman for China's foreign ministry, who made the statement last Friday. Wood said, “It is pure economic coercion.”
