US to 'reap what it sows' over China tech investment ban

Bloomberg and Wallis Wang

The United States government will "reap as it has sown" for restricting advanced technology investment in China, including Hong Kong, Chief Executive John Lee Ka-chiu said.

Starting January 2, US individuals and companies will be banned from making investments in China in various areas including semiconductors, quantum computing and artificial intelligence.

Lee slammed US politicians yesterday for damaging normal trade and investment, the free market and the economic order for their own political goals.

The move harms the global supply chain and America's own business interests, he said, adding the US has a trade surplus of US$271.5 billion (HK$2.137 trillion) with Hong Kong over the past 10 years.

"In order to achieve their political goals, the US politicians harm others as well as the interest of their own country, US people and enterprises, and they will reap the consequences," Lee warned.

"The SAR government will safeguard our own interests while protecting Hong Kong enterprises, and also work with our country to safeguard our national interests."

The government also issued a statement yesterday, expressing strong objection to the US for intentionally targeting China and Hong Kong using various excuses out of political interests.

"In 2023, the US was the third-largest trading partner of Hong Kong, with the total merchandise trade value amounting to HK$472.2 billion. Meanwhile, Hong Kong is America's 27th largest trading partner," it said.

It added that the US ranked sixth in inward direct investment into Hong Kong as of the end of 2022 and eighth in outward direct investment from Hong Kong.

According to a US official, the rule bans American investment into Chinese firms focused on advanced semiconductor technologies, but only requires notification of investment into Chinese companies focused on so-called legacy chips, which are older-generation components essential to a wide array of electronics.

"US investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence and cyber capabilities," said Paul Rosen, assistant treasury secretary for investment security.

Chinese Foreign Ministry spokesman Lin Jian said China "strongly deplores and firmly rejects" the restrictions and has filed a diplomatic complaint with Washington over the matter.