U.S. Lawmakers Encourage Yellen to Expedite China Outbound Investment Regulations

The leaders of a U.S. congressional committee on China, from both the Republican and Democratic parties, have called on Treasury Secretary Janet Yellen to quickly enforce limits on outgoing investments in China. They cautioned that Beijing has been utilizing American funds to advance their technology development, while Yellen’s department is in the process of deliberating new regulations.

In August, President Joe Biden of the United States released a directive that granted the Treasury secretary the power to limit or prevent American investments in Chinese companies operating in three specific industries: semiconductors and microelectronics, quantum information technologies, and specific artificial intelligence systems.

The upcoming order, which is anticipated to be put into effect in the following year as the Treasury department formulates fresh guidelines, is intended to hinder American funds and knowledge from aiding China in advancing technologies that may contribute to its military modernization efforts.

The decision has been criticized by China, while certain U.S. legislators have claimed that it contains numerous flaws.

Mike Gallagher and Raja Krishnamoorthi, the Republican and Democratic members of the House of Representative’s select committee on China, expressed in a letter that while the Treasury contemplates on the specifics of these guidelines, the Chinese Communist Party (CCP) is utilizing American capital and expertise to advance their technological capabilities.

Lawmakers have requested Yellen, in a letter dated October 30th, to broaden her definition of technology in her guidelines concerning investment restrictions. They argue that China has blurred the distinction between commercial and military technology.

Gallagher and Krishnamoorthi stated that we should anticipate the Chinese Communist Party (CCP) attempting to circumvent specific limitations. They further advised Yellen to reject any “excepted transactions” that may undermine the impact of the regulations.

According to them, the Treasury should collaborate with American authorities to ensure that the severest punishments are pursued for any violations. Additionally, they emphasized the importance of addressing less active movements of U.S. capital, like those occurring through public markets and mutual funds.

A few American officials have voiced concerns about making the outbound investment rules too broad as it could potentially harm the U.S. economy. Meanwhile, there are others, such as former Biden administration officials, who believe that while the measure is a positive initial move, Congress should allocate resources to further develop it.

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