An editorial photo art illustrating smart city communication networks against the urban landscape in Shanghai.
Dong Wenjie | Moment | Getty Images
China criticized President Joe Biden’s long-awaited executive order regulating fresh U.S. investment in technology — but stopped short of issuing immediate counter measures.
The Chinese Commerce Ministry issued a strong response early Thursday in Asia, hours after Biden signed off on the measure targeting “countries of concern” on the basis of national security.
“China expresses its grave concern and reserves the right to implement measures,” the Chinese Commerce Ministry said in the statement, according to a CNBC translation.
Biden’s order comes amid an escalating race for global technology supremacy. Rather than an outright ban, the measures are aimed at limiting U.S. investment and expertise in semiconductors and microelectronics, quantum computing and certain artificial intelligence capabilities in China, Hong Kong and Macao.
“This seriously deviates from the market economy and fair competition principles that the U.S. has always advocated,” the Chinese Ministry of Commerce added. “It affects the normal operation and decision-making of enterprises, undermines the international economic and trade order, and seriously disrupts the security of the global industrial and supply chains.”
In October, the U.S. launched sweeping rules aimed at cutting off exports of key chips and semiconductor tools to China, lobbying major chipmaking nations such as Japan and the Netherlands to do the same.
“The message is quite clear. Washington wants to use the national security imperative as a way of trying to limit the transfers of technology and investments related to technology to China, because there’s not just a national security angle, but also quite frankly, a commercial angle,” Eswar Prasad, a professor in international trade at Cornell University, told CNBC Thursday.
“The new technologies including the ones that are covered by this executive order, which are going to be subject to fairly intense competition on the economic front between the U.S. and China,” he added.
He said the executive order “has been cast in a fairly narrow light.”
“Having said that, I think it is going to have a pretty broad chilling effect on technology transfers and investments by U.S. firms in China,” Prasad said.
— CNBC’s Evelyn Cheng contributed to this story.
This is a developing story. Please check back for more updates.