China Package Should Include Outbound Investment Screening Provision, Raimondo Says
Commerce Secretary Gina Raimondo said she supports including an outbound investment screening provision in the final version of Congress’ China competition bill (see 2202030062), and said more guardrails are needed to stop China from finding technology transfer loopholes. While Raimondo didn’t explicitly endorse the bipartisan National Critical Capabilities Defense Act, which would create a committee to review outbound investments, she said the U.S. could use more regulatory power.
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“This is a really important issue,” Raimondo told the House Appropriations Committee last week, “and I am eager to work with you on it and hopeful that some beefed up outbound investment screening provision is included in the final version of the” bill. The idea of an outbound investment screening mechanism has proven polarizing, and former U.S. investment screening officials expect it to draw significant pushback from industry (see 2201140038).
But Raimondo called outbound investment screening a “matter of national security” and said it needs more oversight (see 2205120042). “There's a great deal of U.S. outbound investment going into China in emerging technology, for example -- exactly the areas where we don't want the Chinese to have our money or our know-how,” she said. “We need to be investing in America, building this stuff in America, protecting our assets, our companies, our technology in America.”
Raimondo also briefly spoke about U.S. export restrictions, saying technology exports to Russia are down 70% since the new controls took effect earlier this year. She also said exports of controlled items to Russia are down 99% in that same time period.
“You see it in Russia,” Raimondo said. “They've shut down tank factories, shut down auto manufacturing factories, shut down airlines -- they're not able to replenish.” She said the agency is now “very focused on enforcement so nobody can get around our controls.”
Commerce is also focusing on denying exports of controlled cyber equipment, software and technologies to dangerous end-users, Raimondo said, referencing the agency’s cybersecurity export control rule that took effect in March (see 2205050023, 2110200036 and 2201110025).
While she said it’s a “little bit early” to assess the rule’s effectiveness, she has seen some progress. “We are denying hardware and software related technologies that can be used in malicious cyber activities or misused by authoritarian governments,” she said. “And as the months go by, it’ll be even more significant.”