Don’t Overreact About US Investment in China
Before imposing sweeping new restrictions on capital, the Biden administration should get a clearer picture of where the money is going.
Take a closer look.
Photograph: STR/AFP/Getty Images
President Joe Biden’s administration is considering new rules to screen and possibly block US investments in Chinese companies. If written too broadly, the policy would risk undermining American competitiveness, with little discernible benefit to national security. Rather than rush to impose wide-ranging restrictions, the administration should keep its goals modest and remain mindful of unintended consequences.
Outside of specifically blacklisted companies and jurisdictions, US investors have traditionally been free to put their money in any overseas entity they choose. While the government can reject inbound investments in US companies if they pose a national-security risk, there’s no similar system to scrutinize outbound flows. This has raised concerns that US investors might inadvertently be helping Chinese companies develop technologies useful for military as well as civilian purposes.