U.S. bans investments in China#Econgram_World

Facts:1) Earlier in August, Biden signed an executive order to prohibit new investments in sensitive Chinese technology firms. The decision is aimed at stopping the Chinese military from accessing American capital and knowledge. Restrictions will come into force from 2024.

2) According to U.S. Commerce Secretary Raimondo, restrictions on Chinese technology investments are not meant to “decouple” the American economy from China’s. Instead, the bans are necessary to protect national security.

Analysis:1) Raimondo is the fourth senior Biden administration official to visit China over the last three months. Her goal is to soften the relationship between the two world’s biggest economies following the announcement of new restrictions. Indeed, in her speech, Raimondo stressed the importance of trade relationships between the U.S. and China.

2) Hong Kong's response to the announcement was prompt. The government described the restrictions as “unreasonable measures” because they “damage the economic and commercial interests of American companies themselves”. The restrictions will affect private equity and venture capital firms: they are going to redirect their capital.

Inspired by FT and ReutersWill these restrictions influence the relationship between the U.S. and China in the long run?? Join @TheEcongram