Biden signs an executive order banning US investments in some Chinese companies developing advanced semiconductors and quantum computers, starting in 2024
Biden's order will also require U.S. private-equity and venture-capital firms to disclose certain investments
Wall Street JournalAndrew Duehren
Context & Ripple Effects
This order turns a policy discussed since March—when reporting described a U.S. outbound-investment program under preparation—into a defined restriction scheduled to begin in 2024. Late-July coverage had already narrowed the expected focus to semiconductors, AI and quantum technologies.
It also follows Biden’s earlier investment ban covering Chinese firms tied to surveillance. The new measure matters because it reaches beyond listed-company restrictions to private-equity and venture-capital activity, adding disclosure obligations alongside prohibitions.
First-order effects
U.S. private-equity and venture-capital firms must screen prospective China-related deals against the restricted technology categories and disclose certain covered investments from 2024.
Chinese companies developing the covered advanced semiconductor and quantum technologies lose access to the affected forms of new U.S. capital.
Second-order effects
Fund managers will have to review existing China exposure and decide whether holdings require compliance changes or exits, an assessment already reflected in investors weighing their post-order options.
Cross-border dealmaking in the covered fields gains a regulatory review layer, making capital deployment and portfolio management more complex for U.S. investors.
Third-order effects
If maintained, the policy makes outbound private capital a continuing instrument of U.S. technology policy, rather than relying only on restrictions on companies or goods.
The likely structural direction is more segmented financing for strategically sensitive technologies, with investment decisions increasingly shaped by national-security classifications.
The trend: This is part of the broader shift toward treating capital flows into frontier computing technologies as a strategic-policy concern.
Apropos the reverse CFIUS draft, a while back we tackled technological sovereignty as a concept (in nation-state terms) & what happens when a previously delightfully borderless software landscape all of a sudden starts spouting borders #SparrowOne https://sparrowone.substack.com/…
📢The Biden administration just issued an executive order (EO) on an outbound investment screening mechanism. How can its implementation support a commitment to open markets, business competitiveness, and national security interests? 🧵 https://www.whitehouse.gov/...
Great focus today on #outboundinvestment policy but important not to miss that US investment in #China (including venture capital) is already at an all time low. China's overall net #FDI is down 87% yoy. via @WSJ [image]
Here it is... Reverse CFIUS... A national security rule targeting U.S. venture capital and private equity investments in certain types of Chinese tech cos. But nothing goes into effect yet, despite months of internal WH talks. Comment period https://home.treasury.gov/...
Reverse CFIUS stage 1 arrives. This will still take some months to be implemented. However, Congress will impose a much stricter version at a later date. We at Malmgren Glinsman Partners have written & spoken about this. https://www.wsj.com/...
Today's action, along with our Outbound Investment Transparency Act, will help ensure American dollars and expertise don't go toward building up the Chinese government's military and intelligence capabilities. https://www.nytimes.com/...
The long awaited #outboundinvestment #EO is out! It will create a narrow notification and sometimes prohibition requirement for US persons investing in non-passive investment in China, HK, and Macau in advanced semis, quantum computing, and certain AI tech https://www.whitehouse.…
1-5 FT: US to restrict outbound financial investment “into Chinese quantum computing, advanced chips and artificial intelligence sectors” The narrowly targeted measures follow what Jake Sullivan has called a “small yard, high fence” strategy. https://www.ft.com/...
#NEW: Chairman @PatrickMcHenry and Subcommittee Chairman @RepBlaine release a statement on the Biden Administration's Executive Order restricting outbound investment to China. 👇 Read more 🔗 https://financialservices.house.gov/ ... [image]
3-5 The aim is to stop “countries of concern” receiving US investments that help them develop cutting-edge technologies in areas such as Quantum and AI that may have military applications or other applications that could harm the national security of the United States. [image]