American policy is rightly aimed at outcompeting China. Yet there are no restrictions at all on American money helping China win. There is not even the basic information necessary to decide what funding restrictions, if any, are needed for the US to prevail.

To illustrate, taxpayer subsidies for semiconductor production here are undermined by US direct investment in semiconductor production in China and portfolio investment in state-backed Chinese chip companies. When the Department of Commerce (reasonably) asks for more CHIPS funding in 2025, the Department of the Treasury will likely tell Congress there are no data on American funds supporting competing Chinese production. Sorry, good luck with your vote. The same is true for any activity the US may be averse to, from critical minerals processing to surveillance drones – American money helping China is barely monitored, much less restricted.

This failure does not only apply to advanced technology but that’s where it’s most stark. Export controls limit China’s access to technology through sales and other transfers. The Committee on Foreign Investment in the United States (CFIUS) limits China’s ability to buy technology here. These existing limits are justified by the many possible economic, military, and even human rights costs to technology transfer to China. Yet American funds can freely support development of the same technologies in the PRC. The treatment of outbound investment to date is not only self-defeating in a supposed competition, it’s nonsensical in combination with other policies.

There are additional harmful Chinese activities that American funding can support. The US needs much better monitoring of what money is doing, as well as action to stop flows damaging to national interests. Even in purely financial terms, Chinese securities markets performance, Xi Jinping’s policy performance, and the PRC’s opacity suggest restricting funds is less risky for most investors than taking no steps. Outbound investment is overdue for rational policies, especially ones that stop offering up our capital as a substitute when our knowhow is restricted.