Beijing plans response to US investment prohibition

China is contemplating a retaliatory move in response to the recent surge of US sanctions that limit investments from US venture capital firms in advanced Chinese artificial intelligence (AI) companies.

Shu Jueting, a spokesperson for Beijing’s Ministry of Commerce, stated that the ministry is actively working to assess the impact of President Joe Biden’s most recent executive order and is considering appropriate counteractions, as reported by CNBC.

“We are conducting a thorough analysis of the impact of the executive order and will implement necessary countermeasures based on the findings of this assessment,” Ms. Shu commented.

These remarks are unfolding in the context of a growing technology-driven trade conflict between the United States and China.

In the past week, President Biden signed an executive order that imposed restrictions on venture capital investments in Chinese companies specializing in AI, quantum computing, and cybersecurity. This action was taken under the warning that Beijing-supported enterprises might repurpose their technology for military applications.

The White House has expressed concerns that China’s progress in AI poses a critical national security risk, due to its potential to substantially enhance the country’s military, intelligence, surveillance, or cyber-enabled capabilities.

While these US sanctions are expected to have a detrimental effect on certain startups, American investment in China has sharply declined since the outbreak of the COVID-19 pandemic, amidst intensifying tensions.

According to data from Pitchbook, US venture capital investment in China plummeted from $32.9 billion in 2021 to a mere $9.7 billion the following year, with only $1.2 billion in funding agreements reached so far this year.


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