Tech decoupling between the US and China is about many things, but chief among them is the notion that western technology should not feed Chinese military modernisation and expansion. From an American standpoint, this seems pretty obvious. Why should US money, products and expertise aid the military strength of its chief strategic adversary?
That’s the rationale for last week’s new executive order from the White House limiting US investment into China in areas of technology that pose the most acute national security risks, like semiconductors, quantum computing and artificial intelligence. The idea is to expand on existing export bans to China, as well as limits on Chinese acquisition of US technology, by also restricting how US investors put capital into the most strategic sectors in China.
The new rule is actually much more about expertise than money. “It’s not capital that’s in short supply,” deputy national security adviser Mike Pyle told me. “It’s capital plus the access to experts and additional assistance.” Translation: this isn’t about curbing passive investment into China via, say, public securities or exchange traded funds, so much as it is about preventing top US venture capitalists and private equity funds from transferring important western-made intangible assets — patents, data, software and other kinds of IP — along with their investments.