The US Department of Defense is struggling to get its arms around all of the new security issues that have come with our current technological explosion. One unexpected consideration on the table is placing stricter limitations on investment capital from China flowing into American companies that are working on artificial intelligence.
Technology is the fastest growing industry in the American economy according to recent data. And with all the political talk about “JOBS, JOBS, JOBS,” it’s a bit surprising to see the government floating plans to limit investment in American companies. But that’s exactly what the Pentagon is proposing according to Reuters. From the report:
Of particular concern is China’s interest in fields such as artificial intelligence and machine learning, which have increasingly attracted Chinese capital in recent years. The worry is that cutting-edge technologies developed in the United States could be used by China to bolster its military capabilities and perhaps even push it ahead in strategic industries.
The U.S. government is now looking to strengthen the role of the Committee on Foreign Investment in the United States (CFIUS), the inter-agency committee that reviews foreign acquisitions of U.S. companies on national security grounds.
Reuters was able to view an unreleased Pentagon report that outlines the ways in which Chinese investors have found loopholes in CFIUS that allow them to avoid setting off any regulatory triggers. The report recommends that new legislation be drafted to update the rules governing foreign investment. It also advises that a list of critical technologies be compiled and restrictions should be placed on Chinese investment in those areas of development. Defense Secretary Jim Mattis spoke to the US Senate at a hearing on Tuesday and he insisted that the CFIUS “needs to be updated to deal with today’s situation.”
The second most powerful man in the US Senate, John Cornyn, has begun drafting legislation according to one of his aides. You heard that right. A top Republican is pushing for more regulation and less investment. Time will tell if Republican Party can get behind another one of the Pentagon’s recommendations that goes against everything they stand for. The report is asking for greater flexibility on the immigration policy for Chinese post-grad students studying in the US. It suggests that these students should be allowed to stay in the US after finishing their studies.
The research firm Rhodium Group found that China funnelled $45.6 billion into completed acquisitions and greenfield investments in the US last year. It has increased that investment by 100 percent in 2017. Tech lobbyists will surely be out in full force to fight any sort of regulatory increases.
The new age of security threats includes encryption, online organisation, cyberattacks, rapid spread of disinformation, autonomous vehicles, drones, unprecedented surveillance powers, and now, apparently, the pumping of billions of dollars into our economy. [Reuters]