US Senate Proposes Mandatory Reporting of Investments in Chinese Technologies by Companies

In a decisive move, the United States Senate voted overwhelmingly (91 to 6) on July 25 to support bipartisan legislation mandating U.S. companies to disclose any investments they make in Chinese technologies. The proposed amendment will be integrated into the National Defense Authorization Act (NDAA) and is expected to be enacted later in 2023.

Under this amendment, U.S. companies will be obligated to inform federal agencies about outbound investments involving Chinese technologies, specifically targeting semiconductors used in artificial intelligence (AI).

The amendment, jointly authored by Democratic Senator Bob Casey and Republican Senator John Cornyn, closely resembles the Outbound Investment Transparency Act, which seeks to address potential risks associated with foreign investments in countries like China.

Senator Casey expressed his support for the amendment, emphasizing the need for increased awareness of the extent to which critical technology is being transferred to potential adversaries through these capital flows. He stressed that such information is essential for the U.S. to assert greater control over its economic future.

The bill’s current version is projected to pass through the Senate by the end of the week, after which it will be reconciled with another bill previously passed in the House of Representatives. The final version will then be sent to President Joe Biden for approval.

These legislative measures come amid the backdrop of a growing rivalry between the U.S. and China concerning emerging technologies. On June 28, U.S. officials considered restricting the computing power in semiconductor chips to limit the availability of AI chips in the Chinese market. Responding to this, on July 3, the Chinese government announced its intention to impose export controls on metals utilized in semiconductor manufacturing.

Continuing the tit-for-tat, on July 5, the U.S. reportedly contemplated placing controls on the level of access Chinese companies have to U.S.-based cloud computing services. This would include cloud service offerings from tech giants like Amazon Web Services and Microsoft. The ongoing tensions reflect the ongoing competition between the two superpowers in the realm of technology and innovation.

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