In a significant development, the US Senate has overwhelmingly supported a legislative measure that compels US companies to report any investments made in Chinese technologies. The amendment to the National Defense Authorization Act (NDAA) garnered strong backing with a vote of 91 to 6. It is anticipated that the NDAA, which shapes policies for the Department of Defense, will soon be enacted into law later this year.
This amendment represents a version of the Outbound Investment Transparency Act, which was jointly drafted by Democratic Senator Bob Casey and Republican Senator John Cornyn. The primary objective behind this act is to mitigate the risk of US investments being funneled into foreign nations, particularly China.
Senator Bob Casey shared his views on supporting the amendment, stating, “We need this type of outbound investment notification to understand just how much critical technology we are transferring to our adversaries via these capital flows.”
The implications of this legislation are noteworthy, as it mandates US companies to notify federal agencies about any outbound investments in Chinese technologies, with a particular focus on semiconductors utilized in artificial intelligence (AI). This move is aimed at gaining insights into the scope of critical technology that may be inadvertently transferred to adversaries through financial investments.
As part of the legislative process, the bill is expected to clear the Senate by the end of the week and subsequently undergo reconciliation with a similar bill passed in the House of Representatives earlier. Once this process is completed, it will then proceed to President Joe Biden’s desk for final approval.
The context of this legislation arises amidst an ongoing tussle between the US and China concerning emerging technologies. Recent developments include US officials contemplating restrictions on the computing power of semiconductor chips to curtail the flow of AI chips in the Chinese market. In response, the Chinese government has announced plans to impose export controls on metals used in semiconductor manufacturing. Additionally, the US is reportedly considering measures to limit Chinese companies’ access to US-based cloud computing services.
Furthermore, the Senate has also passed another amendment to the National Defense Authorization Act (NDAA) by a significant majority vote of 91 to 7. This amendment seeks to enhance federal reviews of foreign purchases of US farmland and, in certain situations, prevent acquisitions by entities from China, Russia, Iran, or North Korea. The NDAA, which allocates $886 billion in defense spending, is anticipated to be finalized later this year.