American-style localization



In early August, President Joe Biden signed an executive order that prohibits American companies from investing in China.

The document authorizes the U.S. Treasury Secretary to prohibit or restrict investments in Chinese companies in three sectors: semiconductors and microelectronics, quantum information technology and certain artificial intelligence systems. In addition, companies will now be required to notify the U.S. government of all their activities in the Chinese technology sector.

The order outlines plans to regulate investments in certain countries of «concern», with a separate annex naming China, Hong Kong and Macau as initial targets. Reuters’ White House source noted that other countries could be added later. It’s not hard to guess what other countries will be included.

Also, the Department of the Treasury has issued an advance notice of proposed rulemaking that will give companies and investors time and opportunity to participate in the discussion before the agency issues a formal notice of proposed regulation. This is expected to allow for additional public discussion before Treasury unveils the new rules. Probably so as not to shoot its own companies, which traditionally choose China because of its more favorable operating environment.

Experts note that the whole process may take more than one month, which will push back the introduction of new rules to 2024 — the year of the presidential election. Based on this, and in general, if we remember what happened earlier, one of the points of Biden’s new election campaign (or someone else — from the Democrats), which will be emphasized in the campaign, becomes obvious.

If we move away from the beautiful state-oriented (in the sense of American politicians) formulations, the essence will be approximately the following: we cannot work with China because its technological development poses a threat to our national security.

We can go on and on about where it all started and why the Biden administration needs an anti-China campaign in the tech sector, but it is clear that the actions against TikTok, the labeling of gadgets for compliance with cybersecurity standards, and now this attempt to send American money back home are all part of a larger long-term strategy.

We can only guess who lobbied for it and how it will play out in the election. One possibility is that Biden will be presented as the victor of China and an effective national security advocate. Perhaps this will be just one part of the image.

The main question is how successfully the points of the strategy, which is obviously designed for a long period of implementation, will be realized.

After all, even with the same TikTok, everything is still going on with a creak, and sometimes with laughter, because its popularity in the United States is growing in spite of all the restrictions. The labeling is not very clear yet either, because the project is still in the launch stage, but there are already questions about investments.

Let’s not speculate on «What prevents you from investing not directly, but through…», indeed, American legislation is feared and respected, especially by those who work in the jurisdiction of this country. And, yes, many bodies in the U.S., including financial control, work much more efficiently than the Biden administration, and they are not to be trifled with.

But here’s what happens: by banning investment in Asia, American business is pushed back to domestic (for them) large technology companies, which, although not directly, still work with China, at least in the production.

All this indicates another round of populism, which, nevertheless, vividly outlines anti-Chinese positions. At the same time, it can be stated that this will not lead to any technological sovereignty of the U.S., because American technology companies do not comply with the law even more and more actively.

In fact, they are now given an informal monopoly on technological developments. Everything that will be produced and supplied by American businesses will be controlled only by this country, and all other technologies will be disregarded.

Here we can see a new wave of technological expansion, but how successful will it be? The collapse of Silicon Valley investment banks, scandals with Google trying to monopolize the advertising market worldwide, layoffs at tech giants, glitchy neural networks and constant data leaks…. These are just the recent «successes» of the American tech business.

Yes, we can say that the share of American companies in the technology segment is very large, and one does not make a mistake who does nothing, and mistakes in big business are an integral part of its functioning. But Chinese technology is still more promising for American technology, because, at the very least, inspiration and trends are still traditionally drawn from the East.

And this is absolutely normal. In the big world, it is quite natural when the body of a product is made in China, the filling, for example, in Japan, and the product itself is sold most of all in the United States. But not in the world of President Biden, whose policy is steeped in the fragmentation of the global space in order to control it.

How successful will it be this time? We will see soon enough, but even the example of sanctions restrictions shows that you can always find a way out. Especially when you are not alone in the room.