An animation program about the Chinese Lunar New Year traditions is seen on Nasdaq's outdoor display in Times Square, New York, Feb. 11, 2021.Photo:Xinhua

The Biden administration has reportedly devised a new plan to crack down on Chinese high-tech companies by considering a ban on US investments in those companies, a move experts said again reflects Washington's anxiety over China's high-tech development after many previously launched policies have proved ineffective. 

But this capital ambush will be no more successful than their predecessors, not just because Chinese companies are not solely reliant upon US capital, but because it will infuriate US investors with their $40 billion locked in China's artificial intelligence companies and other hefty investments.  

According to a Reuters report on Friday US time, the White House is expected to unveil in the coming months an executive order to ban investments in some Chinese tech companies, while increasing scrutiny of others. 

The ban is anticipated to apply to some investments related to chip manufacturing, the Reuters report said. 

The executive order, if implemented, would be another noticeable move taken by the Biden administration to cripple China's technology sector after it announced an array of exports restrictions to choke off China's access to advanced chips and semiconductor manufacturing equipment in October.

More hurt for the US 

According to experts, on the one hand, the Biden administration's plan to ban investments in Chinese tech companies is in line with the US' long-term strategy of seeing China as a competitor. 

On the other hand, it reflects the ineffectiveness of previous US crackdown measures against China's high-tech rise, as the Biden administration is constantly adjusting the direction of its crackdown on China's technology companies, from choking off production means, disrupting talent flows, to the current means of curbing capital investment.

"The Biden administration continues to double down on its crackdown against China's chip industries like a gambler's choice, in order to save face on past failures involving anti-China policies," Chen Jia, an independent analyst on international strategy, told the Global Times on Sunday.

One example of the Biden administration's ineffective anti-China policies is the US-proposed Chip 4 Alliance which tries to talk away China's chip partner countries, as multiple news outlets have pointed out that it did not worked out as the US had planned. 

Ma Jihua, founder of Beijing DARUI Management Consulting Co, told the Global Times on Sunday that the pattern of the US crackdown on Chinese companies is becoming increasingly non-selective, as they tend to use whatever measures are at hand to hurt Chinese technology firms, regardless of how they backfire on their own economy. 

"Curbs on investment are sure to bring harm to US companies more seriously than previous policies, as there's huge amount of US investment in Chinese tech companies as a result of high returns. Choking investment in this sector is liking killing the goose that lays the golden eggs for US investors," Ma said.

A recent report by a Georgetown University think tank showed that US investors accounted for nearly one-fifth of investments in Chinese AI companies from 2015 to 2021, with transactions valued at $40.2 billion in total. Qualcomm Ventures and Intel Capital were involved in 13 and 11 investments in Chinese AI companies respectively. 

According to Ma, the US' action of mulling such self-hurting sanction policies reflects that they are turning from business-oriented thinking to a so-called national security perspective, which, if continued, is sure to bring more economic chaos to the country.

Difficult to implement 

Although the US seems to be absorbed with promoting separation between Chinese and US high-tech industries to dismantle China's high-tech sector, it cannot succeed, all experts interviewed by the Global Times on Sunday stressed.

"The effects of the so-called decoupling policy hyped up by some US politicians is based on the assumption that there is a huge gap in scientific and technological strength between China and the US. But this is not true," Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times.

In terms of capital investment in particular, Chinese tech companies do not need US capital as urgently as they did 20 or 30 years ago, as foreign investment from other countries is pouring into China, and the venture capital market has matured in China.

Chen stressed that the US' total investment in China's high-tech sector is dropping in recent years, although they speed up investment in certain areas like artificial intelligence and transportation.

"Now, the bulk of high-tech investment capital absorbed by Chinese companies is from China," he noted.

China's research and development spending rose from 1.03 trillion yuan in 2012 to 2.79 trillion yuan in 2022, ranking second in the world. The spending in basic science research shot up 3.4 times from 2012 to 2021, China Central Television reported. 

Besides, the US would also face mounting internal pressure if the government bans investment in Chinese tech companies, particularly when the US economy has not been freed from problems like inflation, experts said. This will make it hard for the Biden administration to implement the "decoupling" policies as they have designed, experts said. 

According to the Reuters report, the Biden administration had planned to launch the executive order during the fourth quarter of 2022, but delayed the move ahead of US top diplomat Antony Blinken's planned trip to China.

"The investment ban's progress shows that there's a lot of uncertainty regarding the timing and scope of US sanctions against China's high-tech sector," Chen said.

In Xiang Ligang's view, the investment ban is likely a gesture used by the Biden administration to show that they are not soft on China ahead of the US presidential elections in 2024.

"The new sanction is more show than substance," he told the Global Times.