With the recent signing of Executive Order 14100, which regulates the selling of certain technologies to China and outright bans a swathe of Chinese companies, it seems that the U.S. House of Representatives Select Committee on The CCP are now investigating Blackrock and index provider Morgan Stanley Capital International (MSCI) for directing United States’ capital into blacklisted China companies.

“It is unconscionable for any U.S. company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses. We therefore seek additional information regarding this deeply troubling matter,” – Chairman Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL) wrote in a letter to the CEOs of BlackRock and MSCI on Monday.

One day before Trump’s final day in office, his final Executive Order, EO 13974, which amended Executive Order 13959, indicated a growing concern for the growth of the Chinese Military Industrial Complex. It indicated general guidelines and regulation for “any person that the Secretary of Defense, in consultation with the Secretary of the Treasury, publicly lists as a Communist Chinese military company […] and that operates directly or indirectly in the United States or any of its possessions”.

Following President Biden’s announcement of E.O. 14105, signed on August 9^th, the Treasury issued an Advance Notice of Proposed Rulemaking (ANPRM). These “Provisions Pertaining to U.S. Investments in Certain National Security Technologies and Products in Countries of Concern” were published in the Federal Register on August 14. Although the ANPRM provides guidance regarding the potential scope of the outbound investment program, it does not include draft regulatory language.

The ANPRM reads “While the Treasury Department is not considering a case-by-case determination on an individual transaction basis as to whether the transaction is prohibited, must be notified, or is not subject to the program, the Treasury Department likely would need to review the facts and circumstances of the individual transaction subject to consideration for a national interest exemption.” So essentially case by case.

EO 14100, specifically targets three broad categories of high-level technologies and products, selected due to their critical role in developing advanced military, intelligence, surveillance, and cyber-enabled capabilities: 

(1) Semiconductors and microelectronics

(2) Quantum information technologies

(3) Artificial intelligence (AI)

In 2022, both U.S. exports to China and imports from China continued to grow for a third year in a row with a trade deficit with China was $382.9 billion.

The letter issued by the Select Committee on the CCP to Blackrock’s very own Larry Fink reads, “Our review has shown that, as a direct result of decisions made by BlackRock, these Americans are now unwittingly funding PRC companies that develop and build weapons for the People’s Liberation Army (PLA)—the PRC’s military—and advance the CCP’s stated mission of technological supremacy.”

The letter to MSCI makes a similar request, but no real sanctions of any kind when it explains that the committee “would like to offer MSCI an opportunity to help Congress and the American people understand MSCI’s inclusion of red-flagged PRC companies in its indexes. We therefore request that you respond to the following questions by August 14, 2023.”

A decisive factor in conventional conflict has always been the human ability to innovate—to build new technology and to make these new technologies effective. It was once nuclear warfare. Now, artificial intelligence (AI), quantum computing, and other related technologies increasingly make it possible for machines to innovate much faster and more efficiently than humans ever could. Therefore, acting as a catalyst for a multitude of military technologies. Space, AI, and quantum computing are now a central force in international politics; the outcome of this tech race will shape international order for decades to come.

The U.S. Department of Defense (DoD)—is assigned the task of developing the technology that is most likely to support U.S. interests vis-à-vis China. To ensure the United States stays ahead in these key areas. The U.S.-Soviet race to develop nuclear weapons during the Cold War was not a dissimilar era and the Pentagon will need to make some monumental choices in the near future to secure the United States’ post as an example of humanity and good will to the rest of the world. The shining city upon the hill.