The US Senate has backed legislation that mandates US companies to report any investments in Chinese technologies. The National Defense Authorization Act (NDAA) amendment was supported by a vote of 91 to 6. The NDAA, which sets policy for the Department of Defense, is expected to become law later this year.
This amendment is a version of the Outbound Investment Transparency Act, which was penned down by both Democratic Senator Bob Casey and Republican John Cornyn. The purpose of this act is to reduce the chances of US investments being directed toward foreign nations, such as China.
Concerning giving his support for the amendment, Casey said:
“We need this type of outbound investment notification to understand just how much… critical technology we are transferring to our adversaries via these capital flows.“
Implications of the legislation and future outlook
The legislation requires US companies to notify federal agencies of outbound investments in Chinese technologies, including semiconductors used in artificial intelligence (AI). The move is seen as a measure to understand the extent of critical technology being transferred to adversaries via capital flows.
Also, the bill is expected to pass through the Senate by the end of the week before being reconciled with another bill passed in the House of Representatives earlier. It will then go to the desk of President Joe Biden.
This legislation comes amid an ongoing tit-for-tat relationship surrounding emerging technologies between the US and China. In recent developments, US officials announced they are considering restricting the computing power in semiconductor chips to lessen the flow of AI chips available in the Chinese market. In response, the Chinese government announced its own plans to impose export controls on metals used to manufacture semiconductors. The US is also reportedly considering adding controls to how much access Chinese companies will have to US-based cloud computing services.
The Senate also passed an amendment to the National Defense Authorization Act (NDAA) with a majority vote of 91 to 7. However, the amendment aims to increase federal reviews of foreign purchases of U.S. farmland, and in certain situations, prevent Chinese, Russian, Iranian, or North Korean purchases of U.S. farmland. The NDAA, which approves $886 billion in defense spending, will be finalized later this year.
These new moves reflect the US’s strategic approach to managing its economic future amid the global competition in the technology sector. The implications of this new legislation will be closely watched by international stakeholders, as it could potentially reshape the dynamics of technology transfer and investment between the US and China.
