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October 11, 2022

White House Issues Executive Order to Block Chinese Investment in U.S. Tech

White House Issues Executive Order to Block Chinese Investment in U.S. Tech

As reported by the New York Times (Biden Issues New Order to Block Chinese Investment in Technology in the U.S.), President Biden has signed an executive order increasing the power of the federal government to block Chinese investment in U.S. technology and limit its access to U.S. citizen data.

One example of why the trend of Chinese investment in U.S.-based technology is that for almost 20 years – since the release of the iPhone in 2007 – many smartphone apps have been able to access user information. One of the most recent examples of this trend is TikTok, the popular Chinese-owned video app that critics worry could expose user data to the Chinese government.

In recent months, evidence has surfaced that China-based employees of TikTok had access to data about Americans who signed up for the app. However, there is no indication the company has transferred data to the Chinese government.

The Chinese government has prioritized acquiring data about Americans, including hacking the Office of Personnel Management in 2014. The Chinese government took the information of 22.5 million Americans who had filed for security clearances before the U.S. stopped the hack.

For years, one fear for U.S. companies has been requirements from the Chinese government that foreign companies – including Facebook and Google – turn over technology as a condition to enter the Chinese market.

While smartphone apps typically require an "acceptance of usage" for each app, many smartphone users do not read these agreements.

The Executive Order levies further power to the Committee on Foreign Investments in the United States (CFIUS), created by Congress nearly a half-century ago. For years, CFIUS's powers were limited to blocking the foreign acquisition of American firms that might directly impact national security — a military contractor, for example.

An example of foreign investment in American companies includes Japanese companies acquiring U.S.-based assets in the 1980s. It took several years, but the U.S. government worked to implement safeguards against technology utilized for military purposes.

Read the entire article from the New York Times.

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