China urges US to reconsider rules on investment in tech sector

China’s international trade council has formally asked the United States to “carefully consider” rules that ban or restrict U.S. investments in China’s tech sector, state television reported on Friday.

U.S. President Joe Biden signed the executive order last month which prohibits or restricts investments in Chinese entities involved in semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems.

State television said the China Council for the Promotion of International Trade, which is supervised by the Ministry of Commerce, said the order sets “vague and broad restrictions” on investors and transaction types, and does not differentiate between military and civilian purposes.

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“That not only gives rise to transaction risks and compliance cost…but also damages the highly inter-dependent global industrial chain,” the chamber added.

Biden’s order was aimed at protecting national security and preventing U.S. capital from aiding China’s military.

U.S. financial firms, asked to meet a Sept 28 deadline to provide input, are also pushing for greater clarity on the proposed new rules which they say are too vague and put the onus of compliance on investors.

The rules are expected to be implemented sometime next year.