U.S. Executive Order on Investing in China

Andy Rothman provides his assessment of the Biden Administration’s executive order on certain investments in China.

What is your initial assessment of the White House executive order, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” in terms of how it may affect investments by Matthews?

The Biden Administration yesterday issued an executive order aimed at restricting certain investments in advanced technologies in China, in the areas of artificial intelligence (AI), quantum information technologies, and semiconductors and microelectronics.

Implementation of the executive order and any final regulations will be subject to the rulemaking process which will be further subject to public notice and comment. In announcing the order, the Treasury Department said in a statement that it “expects to create a carveout or exception for specific types of transactions, such as certain investments into publicly-traded securities or into exchange-traded funds.” Because of this anticipated exception, at this time we expect there will be no direct impact on our investment process.

We also note that the Treasury said: “The United States benefits from an open investment climate and this new program will not change that. It is narrowly targeted at investments in highly sensitive technologies and products for the purposes of protecting U.S. national security.”

We are closely monitoring the situation and will be assessing developments going forward. For more on our perspectives on investing in China, its economy and the geopolitical landscape, please see our Insights and Sinology sections.