The US administration of Joe Biden, who imposed restrictions on exports of semiconductors to China in October of last year, decided to introduce measures to strengthen overseas investment screening that further restrict US companies from investing in China. The intention is to prevent the transfer of technologies that can be used to strengthen China’s defense capabilities, such as advanced semiconductors, quantum computers, and artificial intelligence (AI). In particular, it is expected that not only the seven major countries (G7) but also allied countries such as Korea will seek to join the investment restriction, which will have a great impact on Korean companies’ investment in China.
The Wall Street Journal (WSJ) and Reuters reported on the 3rd (local time) that the US Treasury Department and the Department of Commerce submitted a report to Congress containing measures to strengthen foreign investment screening in the high-tech sector and the need to secure budgets and establish a separate organization accordingly. Reported. The Treasury Department requested 10 million dollars (approximately 13 billion won) for the establishment of a regulatory body to strengthen screening, saying, “We will prevent the misuse of US capital and expertise in a way that threatens national security.”
Although the high-tech fields to be strengthened in the review were not specified in this report, the US media believes that advanced semiconductors, quantum computers, AI, and cryptography technologies will be included. In particular, there is an analysis that it is highly likely to block technology investment in China through US private equity funds or venture capital. ByteDance, the parent company of TikTok, a Chinese video-sharing platform that is being regulated in all directions by the United States, was also embroiled in controversy after receiving investment from famous American venture capital firms such as Sequoia Capital.
In particular, it is known that the Biden administration is discussing ways to have allies participate in regulating high-tech investment in hostile countries such as China. Currently, Korean companies are required to obtain government approval to export national core technologies, but there is no provision to strengthen screening targeting specific countries.
In response, it is pointed out that there is a possibility that this measure may be applied to foreign companies, such as asking Korean semiconductor companies to strengthen screening of technology investment in China. In a report last October, the Korea Trade-Investment Promotion Agency (KOTRA) Washington Trade Center said, “There is a possibility that the US may request a similar level of investment monitoring from its allies to improve the efficiency of investment review. If this measure is applied ‘offshore’, it may also affect Korean companies’ transactions with China,” he pointed out.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.