Updated 8:44 AM EDT, Wed, Aug 18, 2021

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US to Halt Chinese Investments in Strategic US Tech Firms

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(Photo : Indicted China army officers.

The United States will restrict Chinese investments in key strategic U.S. industries with national security implications such as artificial intelligence (AI) and machine learning.

Federal officials say this move to impede Chinese investments, especially those in Silicon Valley tech firms, is necessary to protect sensitive technologies critical for national security.

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China has repeatedly gained access to advanced technologies made in the United States by acquiring U.S. tech firms via joint ventures, minority stakes and early-stage investments. Chinese investors, most of whom represent companies either owned or controlled by the Communist Party of China, then repatriate these technologies back to China where they are adapted for military use.

In essence, the U.S. is supplying China with the potential weapons China will later use against it on a future battlefield. China has made no secret of its aim to supplant the U.S. as the world's premier economic and military superpower by any means.

The Pentagon said U.S. companies that received Chinese investments in its early stages will not be allowed to receive contracts with the Department of Defense.

It's also looking at ways to strengthen the role the Committee on Foreign Investment in the United States (CFIUS) plays reviewing Chinese investment in U.S. firms, especially technology firms. The government wants to give CFIUS more power to stop "China's predatory practices."

CFIUS is an inter-agency committee of U.S. government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS includes representatives from 16 U.S. departments and agencies, including Defense, State, Commerce and Homeland Security.

"We're examining CFIUS to look at the long-term health and security of the U.S. economy, given China's predatory practices" in technology, said an administration official quoted by U.S. media.

The Senate is drafting legislation to give CFIUS power to block technology investments from China. The bill will empower CFIUS to increase its scrutiny of buyers from nations such as China considered potential threats to national security.

It will also ask the Pentagon to identify what technologies should be under CFIUS scrutiny.

Many experts are beginning to believe China is ahead of the U.S. in AI, thanks to Beijing investing billions of dollars into U.S. research programs and initiatives.

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