Biden’s new bans on investments in China aims at wrong direction

By Denis Simon, academic advisor of Center for China and Globalization (CCG). 

NEW YORK, Aug. 9 (Xinhua) — President Joe Biden’s signing of an executive order limiting U.S. investments in advanced technology industries in China is “aimed in the wrong direction,” said a renowned American professor on Wednesday.

The newest Biden presidential order restricting certain types of foreign investment and capital flows into China represents just “another punitive step in an effort to contain China,” Denis Simon, Professor at University of North Carolina at Chapel Hill told Xinhua.

“One must wonder what the end game here looks like and what might be the underlying strategy that informs such actions,” he said, adding the Biden administration has revealed “a penchant for speaking out of both sides of its mouth.”

It sends senior level officials such as Secretary of State Antony Blinken, Secretary of the Treasury Janet Yellen, Special Climate Envoy John Kerry to Beijing “seemingly to mend fences and build positive momentum in the bilateral relationship and then in the very same breadth its adopts further restrictions and prohibitions that send an entirely different message,” said Simon.

“If I were sitting in Beijing in Zhongnanhai, I would continue to wonder what is the real intention of the US government. How can we expect China’s cooperation on key global issues when we continue to send such mixed signals,” he said.

Even more important, the U.S. level of capital flows into China has never exceeded 5 percent of total flows into the PRC, noted Simon.

“Our investment is not the key element that is driving China’s progress in AI and related technologies.  Unless we somehow manage to secure a global embargo on investment into China’s high tech sector, our actions will likely have only very minimal impact at best,” he said. “The political message to China, however, will be loud and clear: you remain a threat and our actions reflect that thinking.”

The professor suggested it is time for the Biden Administration to “stop being the instrument for the anti-China coalition that exists in Congress and other parts of the Beltway.”

Certainly, American concerns need to be communicated loud and clear to Beijing about military advances that may threaten US national security, said Simon. But the U.S. needs a “more coherent, comprehensive, well integrated China policy” that incentivizes PRC behavior in the right directions such as cooperation on climate change or jointly finding a cure for cancer or dealing cooperatively with the next global pandemic.

“Ad hoc, piecemeal approaches do not add up to an effective China policy, even in the short term.  US policy ought to be aimed at rebuilding trust and revitalizing the relationship for the long-term. The latest action is aimed in the wrong direction and will very likely only leave PRC  leaders further bewildered about U.S. strategic goals and objectives,” he said.