The Biden administration is finalizing rules that will limit US investments in artificial intelligence and other technology sectors in China seen as a threat to US national security.
The rules – proposed in June by the US Treasury – follow an executive order signed by President Joe Biden in August 2023 – will take effect on January 2 and be overseen by a new branch called the Office of Global Transactions.
They cover three sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems.
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Treasury said the “narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications.”
Push to curb China’s access to advanced tech
The rule covers technologies like “cutting-edge code-breaking computer systems or next-generation fighter jets,” Paul Rosen, a senior Treasury official, said.
He added that “US investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence, and cyber capabilities.”
The rule is part of a broader push to prevent US know-how from helping the Chinese to develop sophisticated technology and dominate global markets.
Commerce Secretary Gina Raimondo said earlier this year the rules were crucial to prevent China’s developing military-related technologies.
The new rules contain a carve-out allowing US investment in publicly traded securities, but the officials said the US already has authorities under previous executive order barring buying and selling of securities of certain designated Chinese companies.
The House select committee on China has criticized major American index providers for directing billions of dollars from US investors into stocks of Chinese companies that the US believes are facilitating the development of China’s military.
China has condemned the move to block investment in its tech sectors, particularly artificial intelligence, saying in June that it would not help “healthy development” of AI.
- Reuters with additional input and editing by Jim Pollard
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