The United States appears intent on shaping an economic contest with its principal competitor, China, aiming to slow its technological rise, while observers warn that the ripple effects could touch many other economies.
Under what is described as a banking and investment policy by the Biden administration, the United States is poised to restrict certain investments by tech firms into the People’s Republic as of next January. Other activities may require special authorization before proceeding.
Semiconductor manufacturing, quantum computing, and certain artificial intelligence initiatives are among sectors likely to feel the strongest impact.
According to critics, the plan goes further than a few narrow restrictions and raises questions about the broader effects on American companies that profit from activities in China.
The North American semiconductor sector, which relies heavily on access to the Chinese market for growth and supply chains, could face countermeasures from Beijing.
Beijing officials have argued that such moves threaten China’s development and have vowed to defend their own interests if Washington presses ahead.
Washington is expected to seek support from allies to adopt similar measures, a move that has met varied responses from partners.
Japan has publicly indicated resistance to participating in the restrictions, signaling a divergence among allies.
Meanwhile, Robert Habeck, the German vice-chancellor and economy minister, has shown cautious signs of alignment with a transatlantic approach after some initial hesitation, suggesting a possible shift toward cooperation with Washington.
The European Commission stated it would study the proposed restrictions with an aim of fair assessment, emphasizing due process in consideration of the measures.
Some North American firms, including investment managers in high tech such as Sequoia, have begun separating their China operations from other global activities, a move that could curtail profits earned in the country and influence strategy elsewhere.
Washington’s stated objective is to persuade other nations to emulate the restrictions in an effort to slow China’s technological ascent. Critics argue this stance overlooks the broader implications for global commerce and the risk of provoking a broader economic pushback.
Many European companies, particularly those with substantial markets in China, express concern about the economic costs of an extended confrontation. They argue that such restrictions may contravene established free-trade norms and invite retaliation that would harm global supply chains.
Beyond policy debates, there is debate about the strategic assumptions at play. Some strategists worry that a significant advance in dual-use technologies could be seen as tipping the balance in any potential future conflict, prompting fear of a military escalation rather than a purely economic contest.