US President Joe Biden is finalizing an executive order to restrict American investment in China’s defense industry, Axios reported on Friday. The move will further ratchet up a campaign that Beijing calls “economic coercion.”
The order will be released later this summer, Axios stated, citing anonymous sources. Rumors of an impending order have circulated in the US media since April, but Axios’ sources said that work on the decree was slowed by Washington’s efforts to convince its G7 allies to issue similar restrictions.
“Clear progress” on this issue was made at the G7 summit in Japan this month, one source said.
It is unclear how broadly the order will define China’s “defense industry.” China’s military-industrial complex is almost entirely state-owned, and has already been sanctioned by the Biden administration. Instead, the decree will cover “the fields of semiconductors, artificial intelligence and quantum computing,” Bloomberg reported last month, noting that these technologies all have military applications.
Biden has already attempted to throttle Beijing’s technological progress, imposing export controls last October to block the sale to China of the hardware and software used to produce semiconductors. Furthermore, the US is currently in talks with Japan, South Korea, and Taiwan to formalize the so-called ‘Chip 4 Alliance,’ which Beijing sees as an attempt to exclude China from semiconductor supply chains.
While Biden and his officials justify these measures on grounds of national security, Chinese Foreign Ministry spokesman Wang Wenbin claimed last month that Washington’s “real goal is to deprive China of its development rights. It is pure economic coercion.”
Beijing responded to the semiconductor export controls in kind, barring chips made by US firm Micron from being used in its national infrastructure and investigating the company for potential “cyberspace security risks.”
“We’re not looking to decouple from China, we’re looking to de-risk and diversify our relationship with China,” Biden said at the conclusion of the G7 summit. However, a joint communique released by the group accused China of posing a military and economic threat to the US and its allies, to which Beijing responded by condemning the “anti-China” gathering and issuing a formal complaint to the Japanese government.