Biden set to unveil China investment curbs for high-tech with G-7 backing

By Jenny Leonard

The administration, which has been debating the measure for almost two years, plans to take action around the time of a summit of the Group of Seven advanced economies that’s due to start on May 19 in Japan.

North Korea calls its nukes

By Hyung-Jin Kim The Associated Press

SEOUL, South Korea—North Korea’s foreign minister on Friday called the Group of Seven wealthy democracies a “tool for ensuring the US hegemony” as she lambasted the group’s recent call for the North’s denuclearization.

The top diplomats from G-7 nations, who met recently in Japan, had jointly condemned the North’s recent ballistic missile tests and reiterated their commitment to the goal of North Korea’s complete abandonment of its nuclear weapons. Their communiqué was prepared as a template for leaders at the G-7 summit next month in Hiroshima, where North Korea’s nuclear program will likely be discussed again.

North Korean Foreign Minister Choe Son Hui said her country will take unspecified “strong counteraction” if G-7 countries—the United States, Japan, the United Kingdom, France, Germany, Canada, Italy and the European Union—show “any behavioral attempt” to infringe upon the fundamental interests of North Korea.

“G-7, a closed group of a handful of egoistic countries, does not represent the just international community but serves as a political tool for ensuring the US hegemony,” Choe said in a statement carried by North Korean state media.

Choe said the G-7 communiqué “malignantly” raised the North’s legitimate exercise of its sovereignty.

North Korea has steadfastly argued it was forced to develop nuclear weapons because of US nuclear threats against it. It has said the United States’ regular military drills with South Korea are a rehearsal for invasion, though US and South Korean officials have said their drills are defensive and they have no intentions of attacking the North.

North Korea has test-fired about 100 missiles since the start of last year in the name of responding to US military training with South Korea. But many experts say North Korean leader Kim Jong Un likely uses his rivals’ military drills as a pretext to advance his weapons programs, cement his domestic leadership and be recognized as a legitimate nuclear state to get international sanctions on the North lifted.

North Korea has been hit with 11 rounds of U.N. sanctions because of its past nuclear and ballistic missile tests banned by U.N. Security Council resolutions. Kim has previously said those sanctions “stifles” North Korea’s economy.

The G-7 foreign ministers in their communiqué Tuesday said North Korea will never have the status of a nuclearweapons state under the Treaty on the Non-Proliferation of Nuclear Weapons.

domestic capital pool and state support as foreign investment continues to withdraw.”

AI, quantum computing

The US has been briefing its G-7 partners on the investment curbs for high-tech industries, and hopes to get an endorsement at next month’s meeting, even though the other countries aren’t expected to announce similar restrictions at the same time, the people said. The likeliest sequence is for the executive order to be signed soon after that expression of international support, one of the people said.

The move marks a new phase in the years-long economic campaign against China that’s already seen the US impose tariffs on Chinese imports under ex-President Donald Trump, and more recently seek to restrict exports of key American technologies. Now, capital flows between the world’s two biggest economies are in the crosshairs.

Investors largely shrugged off concerns of more restrictions, saying they would do little to impact actual business because US investments in some of China’s high-tech sectors have already been receding. Chinese chip shares slid on Friday after opening higher, with traders citing profit taking after a recent rally rather than geopolitical concerns.

“The US has been working towards this for awhile and US investments in sensitive areas has already been declining,” said Marvin Chen, an analyst at Bloomberg Intelligence. “Nonetheless, China tech will become more reliant on

THE US says it’s imposing the curbs on national security grounds— a point emphasized by Treasury Secretary Janet Yellen in a speech Thursday—rather than in an effort to hold back the development of a rival superpower, as Beijing has argued. Tensions have escalated since Russia’s invasion of Ukraine, a conflict in which the US and China effectively find themselves on opposite sides, and there’s growing concern about a new Cold War that could fracture the world economy into rival blocs.

The executive order will cover the fields of semiconductors, artificial intelligence and quantum computing—focusing on investments where US firms play an active role in management. That includes venture capital and private equity, as well as certain forms of technology transfer and joint ventures. Officials involved in drafting the order say it targets potential new investments, not existing ones.

Some types of investment will be barred outright, while others will require companies to notify the government. Details are set to be outlined in a set of regulations to follow the executive order, and companies will have some time to offer feedback before the order goes into effect.

US officials say the investment limits are intended to choke off critical funding and know-how that could advance China’s military capabilities.

In a speech delivered in Washington Thursday that addressed US-China economic ties, Yellen said the curbs on outbound investment will affect “specific sensitive technologies with significant national security implications.”

Competitive advantage

“THESE national security actions are not designed for us to gain a competitive economic advantage, or stifle China’s economic and technological modernization,” Yellen said. The US will pursue its security concerns regarding China “even when they force trade-offs with our economic interests,” and will “engage and coordinate with our allies and partners” over the policies, she said.

US officials have made clear that a unilateral measure wouldn’t fulfill the national security goals because investments in China by other countries could just take the place of the American ones that the administration is about to block.

Treasury Department officials this week briefed their European counterparts on the measure, and the administration has begun sharing information with business leaders too. Once the order takes effect, Treasury will be administering a one-year pilot program that could later be expanded.

A spokesman for the National Security Council declined to comment.

As China’s economy took off in the past three decades, American companies plowed money in as they sought to capture a slice of the world’s fastest-growing major market and lower the cost of production for supply chains.

Cumulative total investment there by US business was worth almost $120 billion at the end of 2021, with about half of that going into manufacturing, according to the Bureau of Economic Analysis.

But the growing consensus in Washington in favor of curbs on China, along with Beijing’s turn to more interventionist policies, may already have dented the enthusiasm of many firms.

Last year, the share of deals by US private equity investors that involved buying stakes in Chinese companies shrank to about onequarter of what it was a decade earlier, PitchBook data show. With assistance from Alberto Nardelli, John Cheng and Catherine Ngai/Bloomberg