US declares Chinese tech development a national emergency

The US attempt to put the Chinese genie back in its bottle has escalated further with an executive order prohibiting US investment in a bunch of Chinese industries.

Hilariously, the published executive order insists on referring to ‘countries of concern’, directing people to an annex at the bottom of the lengthy announcement to for the solution to the mystery. There’s only one – China. It frames the development of military, surveillance and cyber technologies by China as ‘an unusual and extraordinary threat to the national security of the United States’, which justifies the declaration of a national emergency.

That, we’re told, in turn activates the International Emergency Economic Powers Act, the National Emergencies Act, and section 301 of title 3 of the United States Code, which ultimately seems to empower the executive to act unilaterally, without any congressional oversight or consent.

The announcement goes on to explain that money and other material support comes in handy for developing said technologies. Furthermore, while the US is normally a big fan of open investment, in these extreme circumstances it is forced to reluctantly prohibit US investments that ‘risk exacerbating this threat.’

No reason is given why investments in Chinese companies will be prohibited, other than the possibility that they may assist China in challenging the US as the world’s primary military superpower, a status it seems to think it’s entitled to in perpetuity. Since the US views China’s growing military might as a threat to its national security, the extension of that logic must surely be that the rest of the world views the US military capability in the same light.

The details are buried within the special legalese reserved for these executive orders, but the WSJ reports that the main focus will be semiconductors and quantum computing when it comes into effect in a year’s time. It seems to be focused mostly on the private equity and venture capital sectors, but it seems safe to assume that US retail investors will also struggle to invest in those areas and that the US will, as usual, impose on allied countries to step into line behind it on this matter.

In anticipation of this move, Chinese state-controlled publication Global Times published an editorial opining that actions such as this increasingly harm America’s own domestic interests, as well as risking alienating itself from the rest of the world. And what does it get in return for all this self-harm? Perhaps a slowing of Chinese R&D by a decade at most. Just as with nuclear, it seems very unlikely that the US will be able to prevent the global proliferation of technologies it wants to keep to itself indefinitely.

It’s also hard to see any end to this type of escalation. What further restrictions on economic activity will be made in the name of this latest national emergency? And how effective will the US be forcing its allies into conflating its national interest with their own? There must surely be a limit to the support the US can expect for such thinly justified unilateral actions which, as renowned independent journalist Glenn Greenwald details below, are also likely stoke international hostility to the country.

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.