Despite deteriorating relations between the United States and China, US President Joe Biden is expected to forgo any new restrictions on American investment in the country, according to a Monday report from Politico. The news was based on the knowledge of five anonymous people on Capitol Hill and K Street, who said the White House is instead focusing on increasing transparency of those deals.
The executive order is expected to prohibit U.S. investments in advanced semiconductors, while requiring U.S. firms to notify federal authorities when doing deals in industries like quantum computing and artificial intelligence. The order may also include some other investment prohibitions, though the details remain unclear.
The debate will now turn to the Senate, where the Banking Committee will hold a hearing Tuesday on sanctions, export controls, and other tools like outbound investment screening.
The news has been a boon for the AUD/USD pair, which has extended its week-start rebound. However, the cautious mood ahead of Australia Retail Sales for January has seen the Aussie pair buyers struggle to break past 0.6730.
The United States’ relationship with China has been strained for some time, with the two countries clashing over a range of issues from trade to human rights. In the past, the US has sought to limit American investment in certain Chinese industries, such as advanced semiconductors, to protect American interests.
However, the Biden administration is taking a different approach. Rather than imposing new restrictions, the White House is instead focusing on increasing transparency of American investments in China. This would involve requiring U.S. firms to notify federal authorities when doing deals in industries like quantum computing and artificial intelligence. The order may also include some other investment prohibitions, though the details remain unclear.
The Senate Banking Committee will hold a hearing Tuesday to discuss sanctions, export controls, and other tools like outbound investment screening. This hearing could provide some clarity on the White House’s plans and the extent of any investment prohibitions.
The news of the White House’s plans has been welcomed by the markets, with the AUD/USD pair extending its week-start rebound. However, the cautious mood ahead of Australia Retail Sales for January has seen the Aussie pair buyers struggle to break past 0.6730.
The Biden administration’s decision to focus on increasing transparency of American investments in China is a sensible move. While some may argue for more stringent restrictions, it is important to remember that the US and China have a complex and intertwined relationship. It is important to maintain open dialogue and cooperation between the two countries, and any new restrictions on American investment in China could damage this relationship.
Ultimately, the White House’s decision to focus on transparency rather than restrictions is a positive step. It is a sign that the Biden administration is committed to working with China to find solutions to the issues that divide them, rather than taking a confrontational approach. This is a welcome development, and it will be interesting to see how the Senate Banking Committee hearing on Tuesday progresses.
