Australia Should Follow US in Banning Investment in Sensitive Technologies in China: Senator

Senator James Paterson in the Senate on Feb. 06, 2023 in Canberra, Australia. (Martin Ollman/Getty Images)

Shadow Home Affairs Minister Senator James Patterson has called on the federal government to follow the Biden Administration’s lead and ban Australians from investing in sensitive technology ventures in China.

President Joe Biden signed the executive order facilitating the ban on Aug. 9, declaring that there was a national emergency in relation to the “unusual and extraordinary threat” posed by “countries of concern” that are using sensitive technologies to advance their military and intelligence capabilities. The executive order added that U.S. investments “risk exacerbating this threat.”

A Whitehouse official speaking in a press call on Aug. 9 said that the new executive order will target a “narrow subset” of investments in AI, quantum information technologies, and semiconductors and microelectronics to fill a “critical gap” in national security.

“The Biden administration is committed to keeping America safe and defending America’s national security,” one official said in the press call. “That includes appropriately protecting technologies that are critical to the next generation of military innovation.

“[China] has a stated goal to acquire and produce key sensitive technologies that directly support [its] military modernization-related activities such as weapons development, and has exploited U.S. investments to develop domestic military and intelligence capabilities.”

“This is a national security action, not an economic one,” the official said.

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Senator Paterson is calling on the Albanese government to follow suit.

He told the Australian Financial Review that it was important strategically to consider how much aid China should be given in its technological race with the West.

“We can have no confidence that any intellectual property shared under these arrangements will be secure,” Senator Paterson said.

“When it comes to technologies that will not just be economically decisive but strategically and militarily too, extreme caution is required. It’s hard to see how any technology identified as a priority under pillar two of AUKUS should have Australian investment aiding China to compete in the tech race with the West.”

Outgoing Investment Should Be Screened

Strategic Analysis Australia Director Michael Shoebridge told The Epoch Times that restricting Australian companies, venture capitalists and superannuation funds and others from investing in Chinese technologies that have national security applications is a necessary policy step and makes good sense.

“Chinese firms need capital to grow and develop technologies,” he said.

“Working with other developed economies to prevent Australian money powering technologies that [Chinese leader] Xi Jinping’s state agencies and military will use to oppress Chinese citizens or intimidate and coerce other nations makes good sense.”

Mr. Shoebridge is calling for the government to consider adding outgoing investment to the purview of the Foreign Investment Review Board process.

“It is time to add the regulation of outgoing investment on national security grounds to the existing Foreign Investment Review Board process, which screens investments coming into Australia on national security grounds,” he said.

“Only screening inbound investments lets outbound money undercut national security policy goals.”

Mr. Shoebridge pointed out that the move is not unheard of, with the Chinese Communist Party also placing stringent goals on all its outgoing investment by state-owned and other companies.

Potential Australian controls will be much narrower and should be consistent with measures being taken by partners and allies.

“We can undercut our policy intentions by letting Australian companies do things we don’t want them to be doing, like investing in Chinese companies which collude with their military, and undercut the controls our U.S. and European partners are putting in place,” he said.

Biden China Ban a Middle of the Road Policy

Meanwhile, U.S. security experts have said the Biden Administration’s China ban will do much to craft meaningful and enforceable rules with which to slow China’s military modernization.

Emily Kilcrease, a senior fellow at the Center for a New American Security (CNAS) think tank, said that the policy would hit only “those transactions that present a high national security risk, without burdening agencies with a program that is too big to properly enforce.”

“The administration is trying to throw a pitch straight down the middle, and with this EO [executive order], they have largely succeeded,” Ms. Kilcrease said.

But she noted that the limited, middle-of-the-road approach would likely draw pushback from both sides of the China debate as Congressional China hawks would seek greater decoupling from China’s economy while industry leaders will want the scope to have more engagement.

“This EO will make many camps unhappy,” Ms. Kilcrease said. “China hawks, both in Congress and former Trump administration officials, wanted more holistic decoupling of investment ties. Industry will chafe at the additional roadblocks for investing in an increasingly difficult market.”

Andrew Thornebrooke contributed to this report.