U.S. lens on investments to hinder AI, chip sectors

Washington's latest proposal to restrict and monitor U.S. companies' and individuals' investments in key technologies in China will jeopardize the global artificial intelligence and semiconductor supply chains, and increase the uncertainty of international economic recovery, officials and experts said on Monday.

The comments came after the U.S. Department of the Treasury fleshed out a proposed rule on Friday that would restrict and monitor U.S. companies' and individuals' investments in China for artificial intelligence, chips and quantum computing.

The proposed rule outlines the information that U.S. citizens and permanent residents must provide while engaging in transactions in this area as well as what will be considered a violation of the restrictions.

A spokesperson for China's Ministry of Commerce said in a statement on Monday that the U.S. repeatedly emphasizes that it has no intention of "decoupling" from China or hindering China's economic development. However, it insists on issuing such proposed rules to restrict U.S. companies' investments in China and suppress the normal development of Chinese industries.

Such measures represent an overreach under the guise of national security, undermine the international economic and trade order, and disrupt the security and stability of global industrial and supply chains, the spokesperson said.

"China expresses serious concern and firm opposition to this and reserves the right to take corresponding measures," the spokesperson added.

Wei Jianguo, former vice-minister of commerce, said: "Despite Washington's shift in rhetoric from decoupling to de-risking in key supply chains, the U.S. government continues to tighten its controls over exports and investments to China.

"The move is the latest evidence that, to contain China's technological rise, the U.S. government is leveraging all means, regardless of how much pain it will cause U.S. companies," Wei said.

Zhou Mi, a researcher at the Beijing-based Chinese Academy of International Trade and Economic Cooperation, said the latest U.S. actions signify a strategic extension of export controls to investment restrictions, aimed at further decoupling from China in high-tech sectors.

Zhou said that these restrictions will disrupt normal trade and investment activities between Chinese and U.S. firms, hamper bilateral technological exchanges, and undermine the global innovation ecosystem.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecommunications industry association in China, said the U.S. government's intensified attempts to contain China's rise in the tech sector through export and investment controls will hurt the interests of U.S. companies and accelerate Chinese companies' efforts for technological breakthroughs.

As the world's largest semiconductor market, the Chinese mainland consumes more than half of the world's semiconductors, which are then assembled into tech products to be re-exported or sold in the domestic market, according to research firm Daxue Consulting.