China slams Biden’s order limiting U.S. overseas tech investment

China criticized President Joe Biden’s long-awaited executive order regulating fresh U.S. investment in technology — but stopped short of issuing immediate counter measures.

The Chinese Commerce Ministry issued a strong response early Thursday in Asia, hours after Biden signed off on the measure targeting “countries of concern” on the basis of national security.

“China expresses its grave concern and reserves the right to implement measures,” the Chinese Commerce Ministry said in the statement, according to a CNBC translation.

Biden’s order comes amid an escalating race for global technology supremacy. Rather than an outright ban, the measures are aimed at limiting U.S. investment and expertise in semiconductors and microelectronics, quantum computing and certain artificial intelligence capabilities in China, Hong Kong and Macao.

“This seriously deviates from the market economy and fair competition principles that the U.S. has always advocated,” the Chinese Ministry of Commerce added. “It affects the normal operation and decision-making of enterprises, undermines the international economic and trade order, and seriously disrupts the security of the global industrial and supply chains.”

In October, the U.S. launched sweeping rules aimed at cutting off exports of key chips and semiconductor tools to China, lobbying major chipmaking nations such as Japan and the Netherlands to do the same.

In July though, U.S. Treasury Secretary Janet Yellen assured her Chinese counterparts during her visit to Beijing, saying that any curbs on U.S. outbound investments would be “transparent” and “very narrowly targeted.”

The wording on Biden’s executive order appears similar to a toned-down version of the initial Outbound Investment Transparency Act the Senate recently introduced. Instead of an outright ban, the revised wording requires U.S. firms to notify the Treasury when investing in advanced Chinese technology on national security concerns.

— CNBC’s Evelyn Cheng contributed to this story.

This is a developing story. Please check back for more updates.