WASHINGTON: The head of the House Financial Services Committee on Thursday (May 25) asked the Biden administration for details about its outbound investment proposal, including why investment restrictions would be more effective than export controls or sanctions.
Republican US Representative Patrick McHenry, whose panel has a wide remit over financial matters and is a key voice on potential investment restrictions on US companies, called on Treasury Secretary Janet Yellen to provide more details ahead of her Jun 7 hearing appearance before the committee.
Reuters reported in February that the Biden administration plans to outright ban investments in some Chinese technology companies and increase scrutiny of others, three sources said, as part of its plan to crack down on the billions that American firms have poured into sensitive Chinese sectors.
The ban is expected to apply to some investments tied to chip production, two of the sources said at the time. The upcoming rules are likely to track sweeping new restrictions the US placed on exports of American artificial intelligence (AI) chips, chipmaking tools, and supercomputers, among other technologies, to China in October, sources also said.
"At a time when the Chinese Communist Party is already cracking down on Western firms and business intelligence services, the administration should reject an EO that advances Beijing’s goals," McHenry said in the letter, referring to the proposal as an executive order.
A Treasury Department spokesperson did not immediately respond to a request for comment. China hawks in Washington blame American investors for transferring capital and valuable know-how to Chinese tech companies that could help advance Beijing's military capabilities.
Efforts to incorporate an outbound investment screening plan in legislation failed in Congress last year.
However, a spending bill signed into law in December gave the Departments of Treasury and Commerce US$10 million each to identify what it would take to implement a program to address national security threats from "outbound investment" in certain sectors.