Joe Biden’s Presidential Decree Sparks Tensions with China: Impact on Technology Investments and High-Tech Sector

2023-08-12 16:53:37

He Joe Biden’s presidential decree it was not a complete surprise even to China. Already during her visit to Beijing, the US Secretary of the Treasury, Janet Yellen, would have announced the US government’s measure to his Chinese interlocutors in broad strokes. However, according to experts, Biden’s initiative could aggravate tensions between the two largest economies in the world.

China he wants to defend himself against the announced restrictions. It will closely monitor the situation and “will resolutely defend its own rights and interests,” a spokesman for the Ministry of Foreign Affairs told state-run CCTV. The goal of the Americans is to disenfranchise China and maintain US world dominance, they said.

Red line for sensitive technologies

The presidential decree targets the areas of the most powerful semiconductors currently offered by the United States, as well as quantum computing and artificial intelligence (AI) technologies. The investments in China’s high-tech sector they will be prohibited or subject to approval in the future if the US government considers that they affect the national security of the country.

High-end processors from companies like Nvidia are just as important for applications in the field of artificial intelligence as they are for future technologies like autonomous driving. Quantum computers can perform many more computational operations than conventional computers, taking encryption technology to a new level. This includes the ability to crack codes that conventional computers won’t be able to crack even years or decades from now.

AI chip company Nvidia’s booth at a computer conference in Hangzhou in October 2021. Image: Long Wei/Costfoto/picture alliance

Preventive measures for national security

For US security policy makers, defense technology companies, and the military, it would be a nightmare if Chinese quantum computers could penetrate sensitive areas of the national security architecture. On Capitol Hill, home to both houses of the US Parliament, there are fears that with the help of US capital China could build new digital smart weapons or the next generation of high-tech fighter jets, Bloomberg News’ Daniel Flatley summed up the events. US security policy reasons.

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“Small yard, high fence”

The US media characterizes the move as a “small yard, high fence” approach: it involves a small number of restrictions, but for a very sensitive area.

The capital restrictions planned by the United States should not jeopardize the thaw with China. However, the restrictions could be tightened if relations with Beijing deteriorate further.

China’s high-tech sector stocks up on AI chips

Recent reports of Chinese high-tech companies buying high-performance US chips seem to confirm the US government’s approach: According to press reports, Chinese Internet giants are setting the pace in the development of generative artificial intelligence systems. Baidu, TikTok owner ByteDance, Tencent and Alibaba have each placed $1 billion worth of orders with US chipmaker Nvidia for some 100,000 A800 processors to be delivered this year, the Financial Times reported on Wednesday. , citing people familiar with the matter.

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