China Report: What’s up with all of Biden’s executive orders on China?
Lately, President Biden has been busy issuing executive orders that are very closely related to China. There have been at most three executive orders in the last three weeks. But you are not alone if they are difficult to follow.
On August 25, he signed EO 14080 to boost the domestic semiconductor industry; last Monday, he signed EO 14081 to build a strong domestic biotechnology industry and reduce reliance on foreign countries; then there’s EO 14083, which was officially published in full today. This last one clarifies the scope and work of the Committee on Foreign Investments in the United States, a body that has been around for more than four decades. There are also reports on additional orders. These orders do not specifically address China but are meant to counter foreign regimes that pose national security threats and technological competitors to the US. There are not many that meet this criteria.
The most difficult one to understand is If you haven’t been following this space closely, the CFIUS order will be the most difficult. To catch you up, CFIUS is an interagency committee spanning 16 federal departments, including Treasury and Defense–and it’s one of the major weapons the federal government has long wielded to stop Chinese companies from acquiring US companies and technologies. For more information, see the short explanation about CFIUS.
Its stated purpose was to protect national security interests from foreign investment. It has prevented Chinese buyers from buying (or forced Chinese owners into selling) Grindr and MoneyGram, as well as Western Digital hard drive maker Western Digital and many semiconductor companies. Under the Trump administration, it famously almost forced ByteDance to sell off TikTok in 2019.
The new EO doesn’t change that. It’s not clear if the new EO will have any impact on CFIUS’s operations. It will instead clarify a mission that has been frustratingly unclear for so long.
Previously, CFIUS cast a long and undefined shadow on any business acquisition activities between the US and China. CFIUS is interested in screening deals in all sectors. No one knows for certain. (My favorite odd example is from 2018, when the committee asked HNA, the Chinese conglomerate behind an aviation group of the same name, to sell a building in Manhattan. Why? CFIUS didn’t clarify but the building is a), located blocks from Trump Tower and B) home to a precinct that oversees security at Trump Tower. Let me let you draw your own conclusions.
The new order is more specific. It lists a few industries that CFIUS should prioritize–microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy, and climate adaptation technologies–and also singles out threats to personal data protection, provisions the committee could use to justify blocking deals in consumer tech that aren’t traditionally seen as a national security risk. To be fair, the “focused scope” of CFIUS is still incredibly broad and can be used however the federal governments wish. As a journalist, isn’t transparency better? It will help the agency use its resources more efficiently, effectively, and help stakeholders know what to expect.
The others: These may seem a bit boring after all the talk about supply chain issues over the past few decades. The other orders, which concern the semiconductor supply chain as well as the biotech supply chains, are primarily concerned with ensuring that technological advancement and economic activity take place on American soil.
The TL;DR here: The US and China used to trust each other in industrial cooperation and trade, despite ideological differences. However, I believe both sides will now agree that this level of trust is no longer possible. These orders are intended to bring back industries from the US. You can read more about the pandemic. )
Despite growing distrust, these policies continue to follow the same strategy that China has used for decades: generous subsidies for industry, government funding for academic institutions and entry barriers for foreign competition to protect domestic businesses. It might even work! It was the Chinese government’s success in growing key technology areas in short time periods that prompted the US to take action.
Whether the administration admits or not, these moves to build up domestic industry are a form protectionism. It reminds me of the term “economic nationalism,” which the New Yorker writer E. Tammy Kim used to describe how both parties’ candidates in Ohio’s Senate race have promised to bring back manufacturing jobs from China. I don’t think that the government should be stepping in to support a domestic industry. Economic nationalism has its problems: unfair competition, corruption and xenophobia. It also makes it difficult to trade with allies. These issues will be a challenge to Biden from both sides.
It is ironic that the US, under both Trump and Biden, is also learning from China after years of critiquing the Chinese approach to developing domestic tech industries. To be fair, tech advancement can only be achieved halfway between excessive government intervention and a free market. It will be interesting for the US to compare how it handles this balance with its counterpart.
Do you have a different thought on the Biden admin’s executive orders on China? I’d love to hear from you at [email protected].
Catch up with China
1. A car crash in Guizhou killed 27 people being transported to a covid quarantine facility. The incident sparked widespread anger online about China’s zero-covid policy. (CNN)
2. Although individual Chinese users are blocked from Twitter, local governments pay for tourism ads. This has been a rapidly growing source of revenue for the platform. (Reuters $)
3. Mexican brick-and-mortar stores are making a fortune by selling Shein clothing they purchased online. (Rest of World)
4. 3,470 Chinese chip companies shut down in 2021, more than in any other year. (South China Morning Post $)
- Callback to my story from August: The era of unlimited semiconductor subsidies, which gave rise to corruption and unprofitable businesses, could soon end in China. (MIT Technology Review)
5. An eye-popping, detailed story about a Chinese spy trying to steal trade secrets from GE is available. These details are partly drawn from the spy’s diary, which he backed up in iCloud. (Bloomberg $)
6. China is revising its 2017 cybersecurity law; changes include a tenfold increase to some financial penalties for service providers that fail to take adequate security measures. (Reuters $)
7. Over the past six years, millions of DNA samples have been collected by the Chinese police in Tibet Autonomous Region. (Citizen Lab)
- The police department bought DNA sequencer equipment from the Massachusetts-based company Thermo Fisher. (The Intercept)
Lost in Translation
There are great works of journalism in Chinese-language media that often don’t reach readers outside China. Each week, I’ll bring you one such story.
Recently Ba Dian Jian Wen , a Chinese-language health news publication, reported on the crunch in getting a 9-valent HPV vaccine in China. The only such vaccine currently in use around the world is Gardasil 9, which was approved in 2014 in the US but not until 2018 in China. Since then, there has been a shortage. Patients have been travelling to Hong Kong to get a Gardasil9 shot. There is still a lot of anxiety about getting the best HPV vaccine before it’s too late. The rush was exacerbated last month, when Gardasil 9 expanded its eligibility age range in China from 16-26 to 9-45.
One More Thing
Have you ever wanted a party game that tests your knowledge of Chinese politics and the ruling party? Just me? There’s a board game that can help you do just that. You can win by earning scores (Xing Fu Zhi Shu /Happiness Points) by paying the in-game currency Zheng Neng Liang /positive energies and answering trivia questions about China’s history and party. My Friday night is over.
I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.