British Business Secretary Kwasi Kwarteng said on Wednesday that he had barred the University of Manchester from licensing the intellectual property related to motion camera technology to a Chinese company, Beijing Infinite Vision Technology Co, on so-called national security grounds, Reuters reported.
The move, which reportedly marked the UK's first intervention under the National Security and Investment Act, is off to a bad start of politicizing economic issues.
While the National Security and Investment Act doesn't mention any specific target country, the latest order has sent sufficient signals when it comes to the application of the act. The motion camera technology itself is not a very sophisticated technology, which doesn't involve intelligence in the defense industry or highly sensitive technology. If such normal business deal is viewed by the UK government as a national security risk, the application of the new act may offer a chilling future for potential investors, which will not only disrupt normal investment activities, but also harm the technological development of the UK.
In fact, even before the effectiveness of the investment act, there were already concerns that it could be used to block various kinds of foreign investment in British companies, which may constitute a new source of uncertainty amid the already changeable market environment.
The acquisition deal for camera technology this time may be small but important in that it could serve as a confirmation of investor fears. And that doesn't bode well for the struggling British economy.
In the past, the UK's pragmatism-oriented business environment attracted large amounts of foreign investment, which played a significant role in the British economy. Foreign investment created 55,319 new jobs in the UK for the financial year 2020 to 2021, according to figures published by the UK Department for International Trade.
But things have changed dramatically. The British economy is now mired in serious trouble. According to a recent Bloomberg survey, the risk of a UK recession in the next 12 months is now almost 50-50.
Unfortunately, even under such circumstances, instead of seeking ways to promote investment, the UK government seems more interested in linking investment with national security risks based on an ideological bias, which would only undermine the interests of British businesses. In the first three months of this year, 17 corporate deals were called in for further government scrutiny, compared with merely 4 such deals in 2021, according to media reports.
One of the high-profile case is the renewed investigation into the Chinese takeover of Britain's microchip plant, Newport Wafer Fab. The technology of the plant is far behind the world's most advanced 3nm process, and previous investigation showed that there were not enough security issues in the takeover. The UK plant is already heavily indebted, so without Chinese takeover, its fate is predictable.
China is not the UK's largest source of foreign investment, but it is definitely among the countries that have made the fastest-growing investment in the UK in recent years.
If the UK government discriminates Chinese investment in technology companies for national security reasons, it will not only dent the investment enthusiasm of Chinese investors, but also hinder the development of its own technology strength, detrimental to its long-term competitiveness.
While some British politicians believe a tougher stance toward Beijing is important given the need to align the stance with the US, its geopolitical tilt should not evade the question about how to ensure the interests of British people and economy.
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