Biden plans to restrict some U.S. investments in China, Parallel Dentons hiving off its operation in China
Biden plans to restrict some U.S. investments in China, Parallel Dentons hiving off its operation in China
10.54pm DC (August 8th) / 10.54am Beijing (August 9th)
Dentons (or Dacheng 大成 in China), the largest western law firm in China by staff, the world's largest global law firm by number of lawyers [12,064] and the 6th-largest law firm by revenue, is hiving off its operation in the country. The firm informed clients on Monday (Aug 7th) it was making the move.
Not yet announcement in LinkedIn and website, but breaking news by The Wall Street Journal China Bureau.
Sadly, in same minute WSJ published this update, in other media outlets, by The New York Times, reported that President Joe Biden plans to restrict some U.S. investments in China, likely opening another front in the clash between the economic powers, just around 2 hours after historic wins by Democrat in Ohio Special Election. Despite having the largest economy on earth, poverty in the US is often grinding and brutal. 14.3% of Americans, nearly 50 million people, were living in poverty as of last December.
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TIMETABLE:
July 28, 2023: 33rd annual Australia-U.S. Ministerial, both sides agree to strengthening AUKUS commitment and or more security/defense cooperation in Indo-Pacific
July 29: Biden administration is hunting for malicious computer code it believes China has hidden deep inside the networks controlling power grids, communications systems and water supplies that feed American military bases, according to U.S. officials.
Aug 3: Two U.S. Navy sailors were charged with providing sensitive military information to China — including details on wartime exercises, naval operations and critical technical material.
Aug 4: A new US Air Force "mission planning" and operations centre will be built in RAAF Base Tindal of Katherine, Northern Territory, Darwin, as part of US$630 million in American spending across the top end over the next two to three years, as part defense cooperation between U.S. - Australia. The "Squadron Operations Facility" in Darwin will add to its growing array of military assets in the north, raising fears Australia may be locked into any future military conflict between U.S. and China.
Around 3-6 Aug 2023: Alaska incident. China - Russia vessels v Navy’s U.S. destroyer and Navy’s Boeing Poseidon.
Aug 6: The Philippines Coast Guard released a video of a Chinese Coast Guard vessel firing a water cannon at one of its ships, going public with a new complaint of aggressive behavior from China. The clash took place in a contested area of the South China Sea. President Bongbong Marcos via his Foreign Minister Enrique A. Manalo summoned Chinese Ambassador Huang Xilian.
Aug 7th: China hacked Japan’s sensitive defense networks, alarming top U.S. national security officials. Tokyo has made strides since the 2020 breach was discovered by the NSA. But the problem is still not fully fixed.
Aug 7th: President Biden signs US-Taiwan trade deal into law
Aug 8th: TSMC approved an investment of up to USD $3.834 billion as part of a joint venture to build a semiconductor plant in Dresden, Germany. They plan to begin construction in the second half of 2024 and to start production by the end of 2027.
Aug 8th (minutes ago): President Biden plans to restrict some U.S. investments in China
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The measure to clamp down on investments in certain industries deemed to pose security risks, set to be issued Wednesday, appears likely to open a new front in the U.S.-China economic conflict.
The Biden administration plans on Wednesday to issue new restrictions on American investments in certain advanced industries in China, according to people familiar with the deliberations, a move that supporters have described as necessary to protect national security but that will undoubtedly rankle Beijing.
The measure would be one of the first significant steps the United States has taken in its economic clash with China to clamp down on financial flows. It could set the stage for more restrictions on investments between the two countries in the years to come.
The restrictions would bar private equity and venture capital firms from making investments in certain high-tech sectors, like quantum computing, artificial intelligence and advanced semiconductors, the people said, in a bid to stop the transfer of American dollars and expertise to China.
It would also require firms making investments in a broader range of Chinese industries to report that activity, giving the government better visibility into financial exchanges between the United States and China.
The White House declined to comment. But Biden officials have emphasized that outright restrictions on investment would narrowly target a few sectors that could aid the Chinese military or surveillance state as they seek to combat security threats but not disrupt legitimate business with China.
“There is mounting evidence that U.S. capital is being used to advance Chinese military capabilities and that the U.S. lacks a sufficient means of combating this activity,” said Emily Benson, the director of project on trade and technology at the Center for Strategic and International Studies, a Washington think tank.
The Biden administration has recently sought to calm relations with China, dispatching Treasury Secretary Janet L. Yellen and other top officials to talk with Chinese counterparts.
But the Biden administration has continued to push to “de-risk” critical supply chains by developing suppliers outside China, and it has steadily ramped up its restrictions on selling certain technologies to China, including semiconductors for advanced computing.
The Chinese government has long restricted certain foreign investments by individuals and firms. Other governments, such as those of Taiwan and South Korea, also have restrictions on outgoing investments.
But until now, the U.S. government had left financial flows between the world’s two largest economies largely untouched. Just a few years ago, American policymakers were working to open up Chinese financial markets for U.S. firms.
In the past few years, investments between the United States and China have fallen sharply as the countries severed other economic ties. But venture capital and private equity firms have continued to seek out lucrative opportunities for partnerships, as a way to gain access to China’s vibrant tech industry.
The planned measure has already faced criticism from congressional Republicans and others who say it has taken too long and does not go far enough to limit U.S. funding of Chinese technology. In July, a House committee on China sent letters to four U.S. venture capital firms expressing “serious concern” about their investments in Chinese companies in areas including artificial intelligence and semiconductors.
Others have argued that the restriction would mainly put the U.S. economy at a disadvantage, because other countries continue to forge technology partnerships with China, and China has no shortage of capital.
Nicholas R. Lardy, a nonresident senior fellow at the Peterson Institute for International Economics, said the United States was the source of less than 5 percent of China’s inbound direct investment in 2021 and 2022.
“Unless other major investors in China adopt similar restrictions, I think this is a waste of time,” Mr. Lardy said. “Pushing this policy now simply plays into the hands of those in Beijing who believe that the U.S. seeks to contain China and are not interested in renewed dialogue or a ‘thaw.’”
Biden officials have talked with allies in recent months to explain the measure and encourage other governments to adopt similar restrictions, including at the Group of 7 meetings in Japan in May. Since then, Ursula von der Leyen, the president of the European Commission, has urged the European Union to introduce its own measure.
The administration is expected to give businesses and other organizations a chance to comment on the new rules before they are finalized in the months to come.
Claire Chu, a senior China analyst at Janes, a defense intelligence company, said that communicating and enforcing the measure would be difficult, and that officials would need to engage closely with Silicon Valley and Wall Street.
“For a long time, the U.S. national security community has been reticent to recognize the international financial system as a potential warfighting domain,” she said. “And the business community has pushed back against what it considers to be the politicization of private markets. And so this is not only an interagency effort, but an exercise in intersectoral coordination.”
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