The measure of US foreign investment, the Biden official says, should not be too broad

Commerce Secretary Gina Raimondo said Thursday that the Biden administration is considering a pilot program to counter the risks of outward investment in China.

Raimondo said on a Bloomberg News forum that the proposed measure to prevent US investors from taking stakes in some Chinese companies should not be widespread or affect 401(k) or retirement plans.

“There are a lot of US pension funds invested in China and people’s pension money. You certainly don’t want to do anything that has unintended consequences,” Raimondo said. “You don’t want to be too broad… anything that is too broad is harmful to American workers and the economy.”

She added that we do not want to escalate unnecessarily. But she said the US does not want US venture capital “to develop semiconductor technology or artificial intelligence technology that China will use in its military.”

Raimondo told Reuters after the forum that it was not clear when the government would end any restrictions on foreign investment. She believes the pilot project is possible. “It is wiser to walk before you run because if you make a mistake there will be consequences that we want to avoid,” Raimundo told Reuters.

When asked how long it would take to finalize any expired rules, Raimondo said, “Months, definitely not years,” she said.

China hawks in Washington accuse US investors of funneling valuable capital and know-how into Chinese technology companies that could boost Beijing’s military capabilities.

Attempts to enact an overseas investment screening plan failed in Congress last year. However, a spending bill signed in December gave the US Treasury and Commerce Department $10 million each to review what is needed to create a program to address national security risks from “outside investment” in certain industries.

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