US Needs to 'Acknowledge' Outbound Investment Risks, Official Says

The U.S. should “acknowledge” the national security risks associated with outbound investments into China, said Nathaniel Fick, the first ambassador at large of the State Department’s recently established Bureau of Cyberspace and Digital Policy. Fick, speaking during a Feb. 2 event hosted by the German Marshall Fund, suggested he’s expecting government action around outbound investments soon.

“This is a real issue. I don't think it's a boogeyman,” Fick said, adding that investments involving China “often come with strings attached,” such as technology transfers. “I'm glad that it's now getting the attention that it deserves.”

Fick’s comments came as the Biden administration reportedly considers establishing an outbound investment review mechanism to screen certain investment transactions with China, including those involving certain sensitive technologies (see 2301270034 and 2301120035). Fick, who was sworn in as ambassador in September, said, “I think we're going to see more on this topic.”

He also touched on export controls against China, saying there’s a “good process in place that adjudicates different positions” among federal agencies on new restrictions, including the new U.S. semiconductor controls announced in October (see 2210070049). “There might be diplomatic priorities that are slightly different from commercial priorities,” Fick said, “and we have to find a way to align them or to package them for greatest efficacy.”

He also said the recent round of U.S. talks with the Netherlands and Japan -- which reportedly ended with an agreement to impose similar export controls on semiconductor-related items destined to China (see 2301270002) -- bodes well for the future of strategic competition with China. The talks were “further indication of the seriousness with which the U.S. -- and not only the U.S., but the U.S. and our allies -- are taking this next phase of geopolitical competition with the Chinese government,” Fick said.