30 July 2024

Funding A Rival: When the United States and Europe Invest in Chinese Tech

Mathilde Velliet

Outbound investments into rival powers are receiving increasing political attention on both sides of the Atlantic, as competition between the United States and China intensifies. The concern lies with American and European investments in certain Chinese technologies - such as artificial intelligence, biotechnology, semiconductors, or quantum computing - which could enable China to enhance its military capabilities and thus may pose risks to national and international security.

n recent years, the United States and the European Union (EU) have stepped up their controls on inbound foreign investment to guard against the risks it poses to sovereignty and the protection of intellectual property. Now, the focus has been extended to outward investment from the U.S. and Europe to certain "foreign countries of concern" - primarily China.

In the U.S., President Biden signed an executive order on August 9, 2023, targeting American investments in certain Chinese technologies. This order imposes notification requirements and prohibitions that are set to take effect in 2024. In light of these U.S. initiatives and encouragement, the EU has also been examining, over the past few months, whether additional control tools are necessary. The EU Commission published its first White Paper on Outbound Investments in January 2024. Unlike the Biden administration, the Commission does not explicitly target China.

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