Yellen Defends Not Acting on China Investment for Years: We Don’t Want ‘Fundamental Impact’ on China Investment

During an interview with Bloomberg on Monday, Treasury Secretary Janet Yellen defended taking two years to issue an executive order on outbound investment in China and stated that they want to get the policy right and “these would not be broad controls that would affect U.S. investment broadly in China, or, in my opinion, have a fundamental impact on affecting the investment climate for China.” And would be “narrowly targeted.”

Bloomberg Washington Correspondent Annmarie Hordern asked, “If the national security concerns are so important, Jake Sullivan called for this outbound executive order two years ago. Why is it taking the administration so long?”

Yellen responded, “So, we are looking carefully at outbound investment controls, and they would serve as a complement to the export controls that we have in place to make sure that we have covered all the channels by which technologies can be transferred to China that we think pose national security concerns. I explained to my Chinese counterparts that if we go forward with these, they would indeed be narrowly targeted. They would focus on a few sectors. In particular, semiconductors, quantum computing, and artificial intelligence, that they would contain a combination of notification requirements, and, in very narrowly-scoped portions of these sectors, prohibitions. But these would not be broad controls that would affect U.S. investment broadly in China, or, in my opinion, have a fundamental impact on affecting the investment climate for China. So, these would be national security-focused.”

Yellen added, “We want to make sure, if we do this, that we get it right. And we’ve been working on the details. If we do go ahead — and there is a good chance that we will — that we would put out, along with the executive order, a notice of proposed rulemaking so that the public would have a chance to comment on these proposed controls and we would receive a wide range of public input before finalizing anything that we do.”

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