America’s plan to vet investments into China
Rules to police investment by American firms in China have acquired a phantom quality: always imminent, always delayed. In recent months the steady beat of debate on the topic has quickened to a drumroll. In March America’s Treasury and Commerce Departments delivered reports on potential rules. The next month Jake Sullivan, President Joe Biden’s security adviser, trailed the policy in a speech. An executive order from Mr Biden is expected to follow. America’s allies are mulling similar restrictions. On June 20th the European Commission announced plans, albeit vague ones, to propose an initiative by the end of the year.
The national-security risk presented by such investments is an open question. So is that of whether Chinese investors could in any case replace the funding if American investors were restricted. Some feel the Biden administration should provide firmer answers before it requires asset managers and pension funds, which are typically exposed to hundreds of global investment funds, to search for traces of Chinese tech companies in their portfolios.
Another danger is mission creep. Under Mr Biden, economic and national-security policy have become increasingly indistinguishable. Last year the president directed the Committee on Foreign Investment in the United States (CFIUS), the American inbound-investment watchdog, which has seen its caseload explode in recent years, to consider wider factors including supply-chain resilience. Scrutinising outbound investments on the basis of broad standards of national interest could become unwieldy. Fears of a growing investment bureaucracy have led some to suggest using existing sanctions rules instead.
2023-06-22 08:46:56
Post from www.economist.com