On September 15, President Joe Biden signed an Executive Order (EO) aimed at intensifying the federal government’s review of foreign investment in US technology and restricting access to citizens’ personal data. The EO directs the Committee on Foreign Investment in the United States (CFIUS), an interagency body composed of 16 representatives from government departments and agencies tasked with reviewing the national security implications of foreign investments in American companies, to focus on transactions involving specific types of technologies deemed critical to US interests.
Technologies covered by the EO include “microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy (such as battery storage and hydrogen), climate adaptation technologies, critical materials (such as lithium and rare earth elements), elements of the agriculture industrial base that have implications for food security,” as well as any other sector identified under a previous Executive Order issued in February 2021 on supply chain resiliency.
Media analyses of the Order have pointed out that, while China is not mentioned by name in the new policy, the EO is meant to primarily target Chinese investment in the US amid worries over IP theft and data security. The latter concern has received heightened attention in recent months due to scrutiny over TikTok, a video app owned by Chinese company ByteDance, which several politicians have accused of sharing Americans’ personal data with the Chinese government. In addition, as noted by the New York Times, the technologies listed by the Executive Order are all part of Chinese President Xi Jinping’s “Made in China 2025” strategy.
In several regards, the EO merely formalizes practices already undertaken by CFIUS, such as blocking transactions that might compromise US cybersecurity or other critical technologies. Just last week, CFIUS blocked the acquisition of Snapdragon Chemistry, an American drug services firm specialising in flow chemistry technology, by China-based pharmaceutical research and manufacturing company Asymchem. Nonetheless, the issuance of this Executive Order is likely to further strain an already-tense US-China relationship.
Access Partnership is closely monitoring technology policy and market risks in the United States and China. For more information, contact Jacob Hafey at [email protected].