Department for Business and Trade (DBT) officials have told companies that — like the Biden administration — the U.K. will curb investment into China’s semiconductor, artificial intelligence and quantum computing technology, a business representative briefed on the plans said. They were granted anonymity to speak about sensitive topics.
But the move could hit firms like Arm, Britain’s semiconductor “crown jewel” which licenses its chip design to Chinese manufacturers, the business rep warned.
New rules on investment “will force hard choices on international businesses, particularly those leveraged in the Chinese market,” said Ross Nugent, senior associate at consultancy Global Counsel’s trade policy practice.
“The British government’s approach to outbound investment screening is embryonic but the direction of travel is clear — the line between national security and trade policy is getting finer and finer.”
Some see restrictions as a necessity at a time of fierce geopolitical rivalry.
Keith Krach, chair of the Krach Institute for Tech Diplomacy at Purdue University and former U.S. under secretary of state for economic growth in the Trump administration, said continuing to provide the Chinese Communist Party (CCP) “and other countries of concern access to the most advanced technology — and delaying the restrictions — will not only compromise [the] U.K.’s national security but undermine its private sector.”
There is ample evidence the CCP “is weaponizing high-tech to boost its global supremacy ambitions,” he warned.
The U.K. government’s effort to chart the flow of outbound investment is “not a precursor to legislation,” states an email accompanying the 16-question multiple choice survey. Getting potential measures right is “essential,” it acknowledges, but the document warns that the U.K. “must strengthen our economic security as a priority.”
The survey “looks like a kind of embryonic form of a new, very difficult export control mechanism,” the same business representative quoted above said.
Businesses are already feeling bruised by Britain’s 2021 National Security and Investment Act (NSIA) — a previous piece of legislation aimed at boosting the country’s investment screening powers on national security grounds. A separate foreign influence law was significantly tweaked after a business backlash.
After those experiences, the same person quoted above said, there is now “trepidation” among some British firms that the government could cast the net too wide.
The U.K. has “a bit of a track record” of broad policies that are “extremely badly targeted and cause a huge amount of grief for industry,” they said. “It’s getting people quite nervous.”
Britain’s Prime Minister Rishi Sunak
