The Biden administration has issued its first wave of investment bans on the Chinese tech space — things like AI or tech with military applications.
Venture capital and PE groups, including the likes of Sequoia China, GGV and Coatue, have poured billions into Chinese tech over the past two decades, funding the growth of nearly every large tech company from TikTok-owner ByteDance to drone-maker DJI.
However, money isn’t the problem for the Chinese; the real kicker is losing access to American know-how.
China is a totalitarian government where its people aren’t free to think and be creative because creatives are naturally disruptive to the government in China and every other government.
There is no democratic system and checks and balances that keep its population under control, the main job of government since the 16th century and what made government and all-year-round businesses and due to an educated population, the growth of nationalists and the printing press.
German goldsmith Johannes Gutenberg created the first printing press in Europe and is credited with inventing the printing press around 1436. However, he was far from the first to automate the book-printing process.
Woodblock printing in China dates back to the 9th century, and Korean bookmakers were printing with moveable metal type a century before Gutenberg.
First Wave of Capital Restrictions
This is the first wave of capital restrictions on the Chinese, but they will be fine for cash.
For the last 30 years, the Chinese have restricted capital from flowing abroad, ensuring a bottomless supply of money at home.
That’s why China has seen explosive growth over the past few decades.
The one thing they need is ACCESS.
Without the know-how and connections American investment gave them, all those doors will slam shut in their face.
Innovation will be stifled, and economic growth will come to a halt.
This is only the first wave of capital restrictions placed on the Chinese, but the long-term effects will be devastating. And to kick Xi while he’s down, he’ll have to sit back and watch the tech sectors of the countries around him surge to the top.