Capitol Hill lawmakers from both parties immediately pledged to go further in the coming months after President Biden announced his effort to prohibit Americans from investing in some Chinese companies.

The president’s executive order was announced Wednesday and looks to block American capital from heading to specific Chinese semiconductor, quantum computing, and artificial intelligence companies after a public review process.

Biden’s team emphasized during Wednesday’s rollout that the rules would be narrowly tailored to technology with military applications while minimizing broader economic impacts. But China reacted fiercely Thursday and accused Washington of trying to block its development.

China’s Foreign Ministry reportedly added a demand that Washington "immediately revoke its erroneous decision" as tensions rose further between the two nations.

Lawmakers in Congress made it clear they want to double down by imposing even stricter measures, which could inflame tensions even further. One idea would put more sectors of the Chinese economy under scrutiny. Another with more limited support would curb current investments in China, not just new ones.

In a statement, Sen. Marco Rubio (R-Fla.) charged that the White House proposal "is riddled with loopholes" and pushed ideas to put more technologies and industries under scrutiny.

"The US needs to do better than this," he said.

One effort that has already passed the Senate

The White House announcement overlapped with a bipartisan effort that has been underway for months and has already seen progress on Capitol Hill.

Senators Bob Casey (D-Penn.) and John Cornyn (R-Tex.) co-authored an amendment that is currently in the mix as part of ongoing negotiations over the nation’s annual must-pass defense authorization bill.

The amendment — called the Outbound Investment Transparency Act of 2023 — has provisions similar to Biden’s executive order in that it would require notification to the Treasury Department of new investments and give the requirements the force of law.

Their bill would also put additional sectors under scrutiny, from hypersonics to satellite-based communications to laser scanning systems.

Senators have already approved the idea and passed the measure as part of the upper chamber’s proposal for this year's defense bill. The next step is for negotiations with the House of Representatives over a final version of the sprawling bill when lawmakers return to Washington in September.

In a statement, Majority Leader Chuck Schumer called Biden’s executive order "a strategic first step" and pledged to shepherd the Senate’s further measure through Congress in order to 'codify it into law and further refine this critical national security tool.'

A further idea to look at existing investments

A more controversial idea — and one that China would surely react even more harshly to — could look at current US investments in the nation.

Biden’s effort is limited to new flows of capital but lawmakers like Rep. Michael McCaul (R-Texas), the chairman of the House Foreign Relations Committee, said existing investments should be under scrutiny.

In a statement Wednesday, he called Biden’s executive order a half-measure, adding "the failure to include existing technology investments as well as sectors like biotechnology and energy is concerning."

Recent tensions between the US and China have already cut into venture capital investments between the nations, but Pitchbook calculates that US investors have participated in nearly $200 billion in deals in China in the last six years alone.

Unwinding those investments across a range of fields would surely be enormously complex and potentially disruptive.

Even Biden's more limited idea to look at new investments is "sending a chilling effect for investors like myself to continue to invest in Chinese startup founders," says venture capitalist Edith Yeung, a general partner at Race Capital.

Ben Werschkul is a Washington correspondent for Yahoo Finance.

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