US Lawmakers Push Bill To Block Investments AI In China

A new proposed bill could extend the government’s powers to block US investments in countries like China, greatly extending the President of the United States’ power to block investments in US companies from foreign actors that may be seen as a threat to national security.

Congress is pressing ahead with legislation that would impose rules forcing the screening of investments coming from countries seen as adversaries, like China. The screening would be focused on protecting US technology and rebuilding critical supply chains, the Wall Street Journal reported. 

Related: China’s State-Backed Blockchain Goes International

The bill, which has drawn considerable bipartisan support, would require American companies and investors to disclose certain outbound investments, and it would create a new interagency panel to review and block investment on national security grounds. The measure would require US entities and their affiliates to notify the federal government of activities in China and any “country of concern,” defined as “foreign adversary” in sectors considered crucial to the supply chain, or if it involves “critical emerging” technologies. Those sectors and technologies include semiconductors, large-capacity batteries, pharmaceuticals, rare-earth elements, biotechnology, artificial intelligence, quantum computing, hypersonic weapon technology, financial technologies, and autonomous systems.   

The bill has gained momentum in the House and the Senate, and after months of delays and efforts to narrow the scope of the bill, lawmakers may push for a vote before the July 4 recess, according to House Majority Leader Steny Hoyer. 

“Creating an outbound investment review mechanism is a critical tool as Congress works to provide guardrails on taxpayer funds and safeguard our supply chains from countries of concern, including the People’s Republic of China,” Messrs. Casey and Cornyn and five House members said in a statement Monday. 

The bill aims to limit the transfer of technology and knowledge to China, and it would cover greenfield investments such as the construction of new plants, joint ventures that involve transfer of knowledge or intellectual property, venture capital and private equity transactions, the text says. 

Related: China Aims To Improve Its Antitrust Law

The updated legislative text proposes the creation of a Committee on National Critical Capabilities to screen investments, but it doesn’t specify which agency would lead it. Lawmakers initially proposed the US Trade Representative, but some critics said that USTR doesn’t have the resources for this. Another possibility is the Treasury Department, which leads the Committee on Foreign Investments (CFIUS) and it is in charge of reviewing foreign investments in US companies, although the ultimate decision to block a potential acquisition or investment lays on the President. 

The bill threatens to delay some deals as the investment restrictions would apply to US entities and any “affiliate,” which also includes investment vehicles created by U.S venture firms to invest in China. Companies would be required to notify the government 45 days prior to the planned foreign investment activity, the text says. The government could also stop a deal if an entity fails to notify the transaction. This regulatory layer is in addition to other possible antitrust or foreign investment regulatory reviews in the country of destination. 

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