US to restrict Chinese investment in ‘sensitive technologies’
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A Pentagon report has recommended that a US regulator is given more oversight over Chinese investments in emerging technologies, which could be considered national security threats.
According to the Rhodium Group, China invested $50bn in the US in 2016, more than any other country, and could double this investment in 2017.
The Committee on Foreign Investment in the US (CFIUS), an inter-agency body headed by the Treasury Department, is responsible for reviewing the acquisition of US companies by foreign buyers, with consideration to national security.
Under the Obama administration, the CFIUS interfered to prevent the takeover of several cutting-edge chip makers by Chinese investors. In recent years, Beijing has been investing in emerging technologies such as artificial intelligence (AI) through government investments in research and foreign acquisitions.
According to Reuters, a Pentagon report warns that China is “skirting US oversight and gaining access to sensitive technology” through the acquisition of US companies working on emerging technologies. These deals – which could include investment in early-stage technologies, joint ventures and minority stakes – have eluded the scrutiny of the CFIUS.
The report recommended developing a “critical technologies” list which could bar Chinese investments, and introducing other measures to protect potentially valuable technology, such as allowing Chinese graduate students in remain in the US after completing their degrees.
There are concerns among some figures in the US government that the newest technologies developed in the US could be used to strengthen Chinese military capabilities.
Particularly valuable to the US military is machine learning, which could form a vital part of its drone warfare programme, Project Maven. Algorithms could be developed to sort through enormous quantities of video footage taken from drones and recognise suspicious behaviour, saving analysts the tedious task of watching the footage themselves.
Similar video recognition technology is being developed for commercial release in Silicon Valley, which could be acquired by other nations.
Republican Senator John Cornyn is drafting legislation to empower the CFIUS to block sensitive technology investments from countries identified as potential national security threats, a representative said.
“Artificial intelligence is one of the many leading-edge technologies that China seeks and that has potential military applications,” his spokesperson said.
“These technologies are so new that our export control system has not yet figured out how to cover them, which is part of the reason they are slipping through the gaps in the existing safeguards.”
Lu Kang, a spokesperson for the Chinese Foreign Ministry, responded by saying that Chinese investment should not be “interfered with politically”. Industry experts in the US have also warned against severe restrictions on investment, which could result in pushback from the technology sector.