UK, EU, Mull Tighter China Controls After New US Restriction

Beijing will be closely watching moves within the United Kingdom and European Union, after President Joe Biden unleashed fresh restrictions against China this week.

On Wednesday President Biden signed an executive order to halt United States investments in sensitive national security technologies and products in “countries of concern.”

The Biden Administration said its new executive order will defend America’s national security by protecting technologies that are critical to the next generation of military innovation. The new measures are on top of existing export controls already in place against China.

Sensitive tech

The sensitive tech identified this week that is critical to US national security covers three sectors:

semiconductors and microelectronics, quantum information technologies, and artificial intelligence.

The executive order will also require government notification in other tech sectors.

In an annex to the executive order, the President specifically identified the People’s Republic of China (PRC), including the Special Administrative Region of Hong Kong and the Special Administrative Region of Macau, as a country of concern.

The executive order will prevent American capital and expertise from helping China develop technologies that could support its military modernisation and undermine US national security.

The measure targets private equity, venture capital, joint ventures and greenfield investments in China.

The White House said President Biden had consulted with US allies on the plan and incorporated feedback from Group of Seven (G7) nations.

UK, EU to follow?

The following day, the British government said it is considering tightening rules on investment in China.

Reuters reported that Prime Minister Rishi Sunak is considering following Biden’s lead and restricting outbound investment into China, adding the UK was continuing to assess potential national security risks.

A spokesperson for the UK government was quoted as saying the US executive order gave important clarity on the US approach:

“The UK will consider these new measures closely as we continue to assess potential national security risks attached to some investments,” the spokesperson reportedly said.

Other media reports suggest the UK government is also discussing the matter with British businesses.

Besides the British, Beijing will also be closely watching developments in the European Union, after Reuters reported that the European Commission on Thursday said it will analyse the US ban on new American investment in China in sensitive technologies, as the issue is also important to the European Union’s economic security

The Commission had in June already presented its own economic security plan consisting of stronger controls on exports and outflows of technologies that could be put to military use by countries like China.

“We will be analysing the Executive Order closely. We are in close contact with the US administration and look forward to continued cooperation on this topic,” a Commission spokesperson told Reuters via email.

“We recognise the significance of the topic, which was an important element in the recent Joint Communication on economic security,” the EC added.

“The EU and Member States also have a common interest in preventing that our companies’ capital, expertise and knowledge fuel technological advances that enhance military and intelligence capabilities of actors who may use them to undermine international peace and security,” the spokesperson was quoted as saying.

According to Reuters, the Commission will present an initiative on the topic by the end of the year.

And Germany, the biggest economic player in the European Union, is also considering the fresh restrictions.

A spokesperson for the German economy ministry took note of the commission’s move to assess the ban and told Reuters: “We will be actively involved in this process.”

Berlin has been reassessing its relationships with certain countries, after its trade deals with Russia broke down following President Putin’s illegal invasion of Ukraine.

Indeed, Berlin has previously called for a de-risking approach to China and begun looking at measures to address risky foreign investments, Reuters noted.