China’s investment controls plan contained by Biden administration

March 8, 2022

China's investment controls plan contained by Biden administration

Biden administration cannot agree on a way forward with China’s investment controls plan

The White House has seen foreign policy become more critical in recent weeks with the Russian invasion of Ukraine. President Joe Biden has earned some praise for his handling of the crisis so far.

Biden’s administration is also keeping an eye on China as the Asian superpower continues to look for ways to extend its reach. But, it is not always obvious what is the best way to slow the rise of the communist nation.

In the foreign community, there is agreement that China’s strength is a problem for the United States, but there is an intense debate on how to take on Beijing.

National security officials push for a tough stance on China

This conversation is happening in the administration at the moment. A split in the White House has even delayed initiatives to limit investments from American banks in Chinese technology firms and startups.

The main roadblock to the investment executive order came from the departments of Treasury and Commerce.

The proponents of the measure, like national security adviser Jake Sullivan, have been pushing for months and believe the limitations will help America’s interests.

Moreover, when an American bank invests in a Chinese tech company, it is indirectly endorsing products that the Chinese government will use later to gain more power.

Sullivan thinks that it is essential to limit the number of times these things happen. The official has been advocating since last year for a crackdown on companies that bend the rules.

The Trump administration has gone through a similar ordeal with national security interests clashing with economic necessities.

Treasury and Commerce departments want more investments in China for American banks

According to reports, officials at the Treasury and Commerce departments think the rules that are currently being discussed will put American companies at a disadvantage.

Asian and European banks do not have to face these hurdles when competing in the Chinese market. For the proponents of US economic interests, China is the second-largest market in the world, and it would be foolish to limit investments there.

Treasury and Commerce have avoided pushing the disagreements in the media. Officials at the two departments prefer to insist that there is nothing out of the ordinary in the current process.

The debate has made one thing clear; China hawks are not happy with how the administration is dealing with the Asian superpower.

Biden administration struggles to contain China’s economic rise

The issue is part of a more significant problem for the Biden administration. It needs to take on China seriously in some areas, but at the same time, cooperating with Beijing is also required in some sectors.

Those differing interests tend to collide at some point, and a choice will have to be made.

However, previous administrations have also not been able to reconcile the two realities in a successful fashion.

Some say it is hard to explain to American investors that their money could be used to grow the surveillance state in China and empower the country’s military in new ways.

Biden’s team probably hopes that keeping this issue in the news might help dissuade some investors from making moves in the Chinese market.

America is trying to contain China’s rise on many fronts, and so far, with very little success.

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