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Biden Issues New Order Blocking Chinese Investments in US Tech

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WASHINGTON — President Biden on Thursday signed an executive order aimed at blocking U.S. investment in Chinese technology and strengthening federal powers to limit access to personal data about citizens.

The new order is designed to highlight the actions of the U.S. secret Foreign Investment Committee created by Congress nearly half a century ago. For years, the commission’s powers were largely limited to blocking foreign acquisitions of US companies that could directly affect national security, such as military contractors.

But the most far-reaching part of Mr. Biden’s new order, and potentially the most important factor in the coming months, is the acquisition of companies that have access to sensitive data of Americans in pending deals. and whether foreign companies or governments may misuse that information.

The language reflects growing fears about China’s access to personal information that Americans pass to mobile apps and other services. The commission, known by the acronym CFIUS, has already scrutinized his TikTok, a popular Chinese-owned video app that critics fear will expose user data to the Chinese government. It is believed that

So far, the Biden administration has said little about TikTok reviews. In the final months of the Trump administration, a hasty attempt was made to sell TikTok’s US operations to a consortium of American and other Western companies. It quickly fell apart. And the deal didn’t solve the broader problem in the escalating technology war between Washington and Beijing. How should America deal with foreign apps that are becoming embedded on the screens of Americans’ smartphones and becoming part of the everyday fabric of American digital life? ?

In recent months, evidence has surfaced that Chinese TikTok employees were able to access data about Americans who signed up for the service. There is no public evidence that the company turned over data to the Chinese government, but China’s national security laws may require the company to do so. The question now is whether requiring all that data to be transferred to a server based in the USA solves that problem or just alleviates it. Questions also persist as to who designed the algorithms that track interest and activity on .

Chinese intelligence agencies have gone to great lengths to obtain vast amounts of data on Americans, including hacking into the Human Resources Administration database during the Obama administration. Information submitted by 22.5 million Americans for security clearance was in China’s hands. It’s not clear what China did with that data.

The Biden administration will likely seek new powers to regulate it, but the executive order, which has been anticipated for months, does not regulate “outbound investment” by American companies in foreign countries. For years, concerns have been raised about China’s requirement for foreign companies to hand over technology as part of the consideration for allowing access to the Chinese market.

“For China, this job is about survival,” Nigel Inkster, former director of operations and intelligence at the British Secret Service, wrote earlier this week in an opinion column for the New York Times, referring to Chinese operatives. I explained the secret operation to acquire technology and manufacturing by. Technology that accelerates the Beijing way. He referred to a Chinese law that mandates Chinese citizens to assist intelligence agencies, usually covertly.

The new order directs CFIUS to focus on certain types of deals that give foreign powers access to technologies Biden has identified as critical to America’s economic growth. According to the White House summary, this includes “microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, and advanced clean energy and climate adaptation technologies.”

China isn’t specifically mentioned, but they’re all part of the “Made in China 2025” movement that President Xi Jinping started seven years ago, and the US is now investing more federal government in technology. There is also. means.

The executive order partly formalizes a new, broader interpretation of the commission’s mandate that has been underway for several years. White House officials say Biden has ordered CFIUS to focus on specific technologies, but they don’t believe the licensing laws need to be amended.

For most of its history, CIFIUS has only investigated deals in which foreign companies attempted to purchase control of US companies that deal with sensitive technology. In many cases, it blocked some such sales because it concluded that the companies provided weapon systems or products used by intelligence agencies. (The Department of Defense and intelligence agencies are members of the committee.) In other cases, American companies have had to sell sensitive products and technology before the deal is complete.

But over time it became clear that a foreign company did not need to own a majority stake in a company in order to access key technology. Thus, in the last seven years or so, the power of inter-agency groups has grown significantly and now holds the power to block even minority investments. This is partly due to concerns that China’s state-owned enterprises are setting up venture capital funds in Silicon Valley and beyond to get an early look at new technologies.

A White House statement said the new order would incorporate that approach and would focus on the characteristics of the technology itself, including “advancements and applications of technology that could undermine national security,” rather than the scale of investment.

CFIUS members are not required to demonstrate that a technology is currently essential to national security as long as it has the potential to do so. For example, artificial intelligence software or quantum computers that create or break strong encryption of data could trigger government action and keep technology out of the hands of China and other competitors. .

The order also gives the commission powers to block transactions that “undermine U.S. cybersecurity.” and urges a review of “progressive investments in sectors or technologies over time” that may “partially cede domestic development or control in that sector or technology.”

David McCabe contributed to the report.