White House weighs order to screen US investment in tech in China, other countries – WSJ

“The Biden administration is weighing an executive order to screen and possibly restrict U.S. overseas investment in cutting-edge technology development in China and other potentially hostile countries,” reported Wall Street Journal (WSJ) late Thursday.

Key quotes

The White House is aiming to issue such an order within the next couple of months to monitor and potentially block outbound investment by American companies and investors, according to people familiar with the matter.

The Chinese embassy in Washington said Beijing opposes the order, adding the measure would limit normal investment in China, disrupt international trade and distort global semiconductor supply chains.

Administration officials continue to discuss which agency would lead the new effort, as well as how far its authority might extend.

As with the earlier legislation, the order is likely to try to close what supporters of investment screening see as a gap in current government oversight.

Of particular concern are joint ventures where US companies transfer knowledge or technology to Chinese partners and Silicon Valley venture-capital firms that invest in China through their U.S. funds or China affiliates.

FX implications

The news appears a positive one for the market sentiment and hence may help extend the US dollar’s pullback. However, the previous news quoting US Treasury Secretary Janet Yellen challenged the optimism. Even so, a lack of major data/events joins an initial hour of the trading day to restrict the market’s reaction to the news.

Also read: US Treasury Secretary Yellen expects downward pressure on US inflation