The Biden administration has doubled down on its persistent drive to “decouple” from China and hobble China’s high-tech advance, as a US Congressional committee is reportedly targeting California-based venture capital investor Sequoia Capital as part of the government’s efforts to block its investment into high-tech sectors in China.
However, Chinese observers said the protectionist move could mean a heavy price for Americans, with the risk of losing access to the world’s market with the most potential, while backsliding on the hard-won progress in bilateral relations through high-level exchanges this year.
China’s technological rise is unstoppable, as the unexpected release of Huawei’s Mate 60 smartphones showed the world that Chinese companies have stepped up efforts to enhance their independent research and development (R&D) capability despite the intensifying US crackdown and restrictions, experts said.
The US House Select Committee on China is seeking information about Sequoia’s investments in artificial intelligence (AI), semiconductor and quantum computing companies in China, as well as its recently announced split into three firms, Bloomberg reported on Thursday.
In a letter to the company, US lawmakers asked Sequoia and Sequoia Capital China to provide information about each firm they had backed that is based in China, or with significant operations there, that was engaged in certain technologies, it said. The letter also requested information on dollar amounts, business expertise provided to the companies, investment criteria and the names of Chinese government investors.
The move came as the Biden administration intensified its controls on chip exports to China on Tuesday, following an executive order that restricts US investment in some Chinese high-tech sectors in August.
Observers said these latest moves show that US strategy of “decoupling” from and containing China is ingrained, but shorting China is costly and will hinder the US in terms of innovation and the long-term global technology competition.
“The Biden administration’s intention is obvious – containing China’s high-tech advance through administrative measures. However, the US should know that stifling China will not help the US run faster,” Li Yong, a senior research fellow at the China Association of International Trade, told the Global Times on Thursday.
While US Senate Majority Leader Chuck Schumer recently complained that China should provide “a more level playing field,” it is the US side whose business environment keeps deteriorating due to many US politicians’ Cold War mentality, Li said, noting that the US attitude toward China’s tech development is “sabotage and impediment” rather than “fair competition.”
He said the sinister US move of blocking China’s progress in high-tech sectors will backfire and cost US companies heavily, as they would make lower profits by losing access to the market with the most potential in the world. In the long term, the R&D capability of the US will be reduced as well as its global tech competitiveness, Li said.
US venture capital firms have taken part in more than 2,700 Chinese start-up deals worth $165.7 billion since 2016, the Wall Street Journal reported in August, citing US research firm PitchBook Data.
However, US investment dwindled to participate in 30 deals totaling about $200 million in China in the second quarter of 2023, the lowest quarterly number of deals since at least 2016, it reported.
Due to escalating US hegemony and unilateral protectionism, the China-US relationship has reached its lowest point in recent years.
Since 2023, high-level exchanges have brought hope for the restoration of bilateral relations, with the announcement of the establishment of new communication channels marking an important step for improving bilateral relations.
“Washington’s two-faced approach is fundamentally unchanged – cracking down on China where it can while seeking to cooperate with China where it needs to,” He Weiwen, a senior fellow of the Center for China and Globalization, told the Global Times on Thursday. “We must look at what the US does instead of what it says.”
“We strongly oppose the ‘tech decoupling’ of the US, but we are not afraid of such crackdowns, as more Chinese tech companies have stepped up independent innovation,” He said.
Whatever measures the US takes, its purpose of hobbling China’s high-tech advance is unlikely to work as intended, Li said, noting that the unexpected release of Huawei’s cutting-edge Mate 60 series shows that Chinese companies have ramped up efforts for independent R&D despite the escalating US crackdowns.
“Any conflict or confrontation between China and the US would produce no winner but only spell disaster for the world. The only right choice for the two countries is to combat global challenges together, and provide more peace and development dividends to the world,” Chinese Ambassador to the US Xie Feng said in a keynote speech at the fifth US-China Business Forum in August.
As the world’s top two economies, China and the US are both important participants and contributors of global tech innovation and development, and they have broad common interests and cooperation scope in technology. They should strengthen cooperation and exchanges in this regard to mutually promote technology advances and benefit all human beings, analysts said.