Joe Biden has moved to restrict US investment in Chinese technology, signing an executive order which focuses on a few, sensitive hi-tech sectors including semiconductors, quantum computing and artificial intelligence (AI).
It is the latest in a series of measures taken by the US to restrict China’s access to the most advanced technology and comes as the president has embarked on a multi-state tour of the south-west to tout his plans to revive American manufacturing after decades of decline.
The restrictions are expected to take effect next year – and come at a sensitive time in the US-China relationship. The Biden administration has launched diplomatic overtures to Beijing in recent months, seeking to mend ties after a series of incidents, while still attempting to bolster its position against China on military, economic and technological fronts.
What are the latest restrictions?
As a result of previous Biden administration measures, the US already bans or restricts the export to China of many of the technologies covered in these new measures. The aim of Wednesday’s executive order is to prevent US funds from helping China build its own domestic capabilities, which could undermine the existing export controls.
Under the executive order, the US Treasury has been directed to regulate certain US investments in semiconductors and microelectronics, quantum computing and artificial intelligence.
China, Hong Kong and Macau are listed as the “countries of concern”, but a senior Biden official has told Reuters other countries could be added in the future.
The rules are not retroactive and apply to to future investments, with officials saying the goal is to regulate investments in areas that could give China military and intelligence advantages.
Britain and the European Union have signalled their intention to move along similar lines, and the Group of Seven advanced economies agreed in June that restrictions on outbound investments should be part of an overall toolkit.
Biden’s plan has been criticised by Republicans, many of whom say it does not go far enough.
Republican Senator Marco Rubio has called it “almost laughable”, adding that the plan is “riddled with loopholes … and fails to include industries China’s government deems critical”, he said.
How has China reacted?
A spokesperson for the Chinese embassy in Washington said the White House had ignored “China’s repeated expression of deep concerns” about the plan.
The embassy warned that it would affect more than 70,000 US companies that do business in China, hurting both Chinese and American businesses.
The country’s commerce ministry said it reserved the right to take countermeasures and encouraged the US to respect the laws of market economy and the principle of fair competition.
What part do these measures play in Biden’s re-election bid?
As the executive order was made public, Biden was speaking in New Mexico, touting his government’s success in boosting manufacturing jobs in the renewable energy sector.
“Where’s it written that America can’t lead the world again in manufacturing? Because we’re going to do just that,” Biden said at the groundbreaking of a new factory manufacturing wind turbine towers in the city of Belon.
“Instead of exporting American jobs, we’re creating American jobs and we’re exporting American products,” he added.
However, polling shows that for many, the perception of the president’s economic policies – “Bidenomics” as his communications team likes to call them – are at odds with a range of positive indicators. US inflation has dropped to the lowest levels since 2021 and the administration has repeatedly touted months of consistent jobs growth; despite this though multiple polls show that only a minority of Americans support Biden’s handling of the economy.
The cornerstone of Biden’s refreshed bid to voters are two major bills he shepherded through Congress and signed into law a year ago: the Chips and Science Act – which pumps huge funding into semiconductor manufacturing, research and development – and the Inflation Reduction Act (IRA), a law for megaprojects boosting green investment.
The chips act aims to further freeze China’s semiconductor industry in place, while pouring billions of dollars in subsidies into the US chip industry.
Both laws, along with the growing restrictions on Chinese industry, are positioned to win back portions of the working-class vote who felt left behind by globalisation and turned to Donald Trump at previous elections.
What’s next?
The ban is a step in a broad and ongoing push to undermine China’s efforts to achieve independence in a number of technological areas, in particular the development of advanced semiconductors.
In response to previous chip bans, Nvidia one of the world’s leading chip companies, has started offering a less advanced chip, the A800, to Chinese buyers. But new curbs being considered by Washington would restrict even those products.
In possible anticipation of such a move China’s tech giants – including Baidu, TikTok-owner ByteDance, Tencent and Alibaba – have made orders worth $1bn to acquire about 100,000 A800 processors from the Nvidia to be delivered this year, the Financial Times has reported.
The Chinese groups had also bought a further $4bn worth of graphics processing units to be delivered in 2024, according to the report.
Reuters and Agence France-Presse contributed to this report
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
