The United States Senate overwhelmingly voted on July 25 to support bipartisan legislation that requires U.S. companies to report any investments made in Chinese technologies. With a vote of 91 to 6, the Senate backed the amendment to the National Defense Authorization Act (NDAA), which is expected to become law later this year. This amendment will mandate U.S. companies to inform federal agencies about their outbound investments in Chinese technologies, including semiconductors used in the development of artificial intelligence (AI) and AI itself. Democratic Senator Bob Casey and Republican Senator John Cornyn drafted the amendment as a version of the Outbound Investment Transparency Act, which aims to address the risks associated with foreign investments in countries like China. Senator Casey emphasized the need for outbound investment notification to understand the extent to which critical technology is being transferred to adversaries through capital flows. He stressed that such information will enable the U.S. to assert control over its economic future.
The bill is expected to pass through the Senate by the end of the week and will then be reconciled with another bill previously passed in the House of Representatives before being signed off by President Joe Biden. These measures have emerged as part of an ongoing tit-for-tat relationship between the U.S. and China regarding emerging technologies. In June, U.S. officials announced a consideration to restrict the amount of computing power in semiconductor chips to limit the availability of AI chips in the Chinese market. Shortly after, on July 3, the Chinese government revealed plans to impose export controls on metals used in semiconductor manufacturing. The U.S. retaliated by reportedly considering implementing controls on the access Chinese companies have to U.S.-based cloud computing services (CCS) on July 5. This would affect major CCS providers such as Amazon Web Services (AWS) and Microsoft.
The legislation promoting transparency in reporting investments reflects the increasing tension between the U.S. and China in their competition for global technological dominance. By requiring U.S. companies to reveal their investments in Chinese technologies, the government aims to gain better insight into the transfer of critical technology and strategically position the country to protect its economic future. This move also demonstrates the government’s commitment to addressing national security concerns associated with foreign investments, particularly in the technology sector.
It is crucial to monitor the evolving relationship between the U.S. and China as they continue to introduce measures impacting emerging technologies. Both countries are maneuvering to safeguard their interests and establish dominance in the global technological landscape. The Senate’s support for the reporting amendment signifies the U.S. government’s determination to gain control over critical technology transfer and minimize risks associated with such investments. As this legislation progresses through the legislative process, its impact on U.S.-China relations and the technology sector will become clearer. Both governments will continue to implement policies aimed at protecting their economic and national security interests, which will shape the future of the global technology industry.