Biden issues a new directive to stop Chinese technology investment in the United States.

Biden issues a new directive to stop Chinese technology investment in the United States.

The action, which is certain to exacerbate relations with Beijing, underscores rising concern over China's capacity to access personal information provided by Americans to mobile applications and other businesses.

Biden issues a new directive to stop Chinese technology investment in the United States.
A humanoid robot at the Consumer Electronics Show in Las Vegas in January. The directive issued by President Biden is crucial for microelectronics, artificial intelligence, biotechnology, and other fields. Patrick T. Fallon/Agence France-Presse — Getty Images

WASHINGTON – President Joe Biden signed an executive order Thursday that expands the federal government's power to prevent Chinese investment in technology in the United States and limit access to people' private data. This is likely to aggravate relations with Beijing.

The new order tries to unify the activities of Congress's secretive Committee on Foreign Investment in the United States, which was founded over 50 years ago. For many years, the committee's authority was effectively confined to prohibiting foreign takeovers of US enterprises that may have a direct influence on national security, such as a military contractor.

The most far-reaching part of Biden's new order, which may be the most important in the coming months, directs the committee to investigate whether a pending transaction involves the purchase of a company with access to sensitive data about Americans, and whether a foreign company or government could exploit that information.

This statement reflects increased concern about China's potential to access personal information provided by Americans to mobile applications and other services. The committee, known by the name CFIUS, is reported to be be investigating TikTok, a popular Chinese-owned video app that opponents worry may share user data with the Chinese government.

So yet, the Biden administration has stated very little about its TikTok assessment. In the closing months of Trump's presidency, there was a frantic move to compel the sale of the TikTok company in the United States to a consortium of American and other Western corporations, but it swiftly failed. And the agreement never addressed the wider topic in Washington and Beijing's escalating technology wars: how should the US deal with foreign applications that are taking root on the screens of American smartphones and, by extension, in the everyday digital lives of Americans?

In recent months, evidence has surfaced that TikTok staff in China were able to access data belonging to Americans who had joined up for the site. Although there is no public proof that the corporation provided data with the Chinese government, Chinese national security rules may require it to do so. The issue today is whether forcing all of this data to be moved to American servers will fix or merely ameliorate the problem. There is also the matter of who creates the algorithms that track Americans' online interests and actions.

Chinese intelligence agents have gone to considerable lengths to gather enormous quantities of data on Americans, including hacking into OPM systems under the Obama administration. Before US officials discovered it, Chinese authorities had obtained information on 22.5 million Americans who had requested for security clearances. It has never been revealed what China did with this information.

The presidential order, which has been sought for months, does not restrict "foreign investment" by US firms in other countries, but the Biden administration will almost certainly seek additional authorities to do so. For years, one issue has been China's insistence that foreign firms hand up technology as part of the price for entry into the Chinese market.

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"This work is about survival for China," Nigel Inkster, the former director of operations and intelligence for British intelligence, wrote earlier this week in The New York Times opinion section, describing covert operations by Chinese agents to obtain technology or manufacturing techniques that would pave the way for Beijing. He cited a Chinese legislation that mandates Chinese individuals to assist intelligence agents, generally in secret.

The new directive requires CFIUS to focus on deals that might provide a foreign power with access to technology that Biden has described as important to US economic growth. According to a White House description, they include "microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced renewable energy, and climate adaption technologies."

While China is not expressly mentioned in the directive, all of these sectors are part of President Xi Jinping's seven-year-old "Made in China 2025" project, and they are also technologies in which the US is currently spending greater government resources.

In other ways, the President's order formalizes a longer-running, larger understanding of the committee's jurisdiction. Officials at the White House think that Biden's directive to focus CFIUS on specific technologies does not necessitate a change in the enabling law that has been in place since the group's inception during the Gerald Ford administration.

CFIUS exclusively evaluated deals in which a foreign corporation sought to acquire a controlling stake in a U.S. company engaged in sensitive technology for the majority of its history. It halted numerous such transactions, frequently because it determined that the corporations were selling military systems or items utilized by intelligence organizations. (The committee includes Defense Department and intelligence personnel.) In other circumstances, US firms were required to sell a critical product or technology before the deal could be consummated.

However, it has become obvious over time that a foreign corporation does not need to own a majority stake in a company to acquire access to crucial technology. The Interagency Group's authority has grown substantially over the last seven years, to the point that it may now obstruct even small investments. This has occurred in part due to concerns that Chinese state-owned firms are establishing venture capital funds in Silicon Valley and elsewhere in order to gain an early glimpse of breakthrough technology.

The new order, according to a White House statement, would formalize that approach, looking not at the scale of the investment but at the features of the technology itself, including "advances and applications in technology that might harm national security."

CFIUS members would not be required to demonstrate that a technology is now essential to national security if it has the potential to be so. Artificial intelligence software or quantum computers, for example, that allow or break robust data encryption might prompt government intervention to keep the technology out of the hands of Chinese or other rivals.

The directive also empowers the committee to veto any agreement that "undermines US cybersecurity." It also asks for a review of "incremental investments in a sector or technology over time" that "may give up domestic development or control in that industry or technology piece by piece."

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