UK may follow US ban on Chinese tech investments

UK may follow US ban on Chinese tech investments

US Bans Tech Investments in China, UK Considers Similar Measures

US President Joe Biden

On Wednesday, US President Joe Biden unveiled an executive order banning new investments in certain tech sectors in China, citing security risks. The order is set to come into effect next year, and the US will be waiting to see if its closest ally will follow suit. However, for now, the UK says it will consider the measures taken by its transatlantic partner, as it continues to evaluate security implications.

“This executive order on outward investment gives important clarity on the US approach,” a spokesperson for the government said in a statement shared with the Financial Times earlier today. “The UK will consider these new measures closely as we continue to assess potential national security risks attached to some investments.”

The forthcoming ban includes new private-equity, venture-capital, and joint-venture investments in advanced computer chips, quantum computers, and certain AI systems. Furthermore, companies already doing business in China will need to notify the government of new investments in these sectors. The goal is to hinder the Chinese military from obtaining both US technology and money.

Needless to say, China did not respond kindly to the order, stating it considered the measures to be “blatant economic coercion and technological bullying.”

The UK’s Diplomatic Conundrum

Rishi Sunak

This leaves Rishi Sunak and his government with a bit of a diplomatic conundrum. In the declaration on cooperation on export controls between the US and the UK signed in June, the parties agreed to undertake a review of export control, focusing on “end users of concern.” Britain further said it would update its control regime to better “tackle sensitive technology transfers.”

The UK has also stated it is ready to remain closely tied to the approach of the US, especially when it comes to military technologies, and “respond effectively” to any impact British capital and technology could have on shared security concerns.

Mainland China is not a huge destination for UK foreign investment, attracting £10.7bn (€12.4bn) in 2021, compared to the £461.4bn (€537.5bn) that flowed westward across the Atlantic. However, in an update on the government’s foreign policy plan from May, Britain says it will endeavor to shield critical supply chains but also emphasizes the importance of UK-China trade for the British economy.

As technology, economics, and national security become ever increasingly intertwined, it seems we are going to need a whole new school of high-stakes tech diplomacy.

Evaluating Security Risks and National Interests

Chinese flag

The US executive order banning tech investments in China is a response to growing concerns about security risks associated with certain sectors. Advanced computer chips, quantum computers, and certain AI systems are considered technologies with potential military implications. By restricting investments in these areas, the US aims to prevent the Chinese military from accessing US technology and capital.

The UK, as a close ally of the US, is currently evaluating the security implications of such investments. While mainland China may not be a significant destination for UK foreign investment, the British government recognizes the importance of UK-China trade for the British economy. In a delicate balancing act, the UK aims to shield critical supply chains while closely aligning with US policies when it comes to military technologies.

The diplomatic conundrum faced by Rishi Sunak’s government stems from the need to protect national security interests while maintaining economic ties. The UK has acknowledged the significance of responding effectively to shared security concerns and remaining closely tied to the US approach. Cooperation on export controls and a review of technology transfers are part of the ongoing efforts to address these challenges.

China, on the other hand, has criticized the US executive order as “blatant economic coercion and technological bullying.” This response highlights the complex dynamics between global tech giants and their relationships with different nations. As geopolitical tensions rise, it becomes increasingly clear that high-stakes tech diplomacy requires careful evaluation of security risks and national interests.

Conclusion

The US ban on tech investments in China has sparked a diplomatic evaluation in the UK. As the closest ally of the US, the UK is considering similar measures to address potential national security risks associated with certain tech sectors. With a focus on advanced computer chips, quantum computers, and AI systems, the ban aims to prevent the Chinese military from accessing US technology and capital.

The UK’s response requires a delicate balance between safeguarding critical supply chains and maintaining economic ties with China. While mainland China may not be a significant destination for UK foreign investment, the British government recognizes the importance of UK-China trade for its economy. Close cooperation with the US in areas of military technologies and shared security concerns is a key consideration in navigating these complex challenges.

As technology, economics, and national security become increasingly intertwined, the need for high-stakes tech diplomacy is clear. It is evident that evaluating security risks and protecting national interests will be crucial in shaping future relationships and ensuring a balanced global tech ecosystem.