- The US Treasury has issued a final rule on Executive Order restricting investment in certain Chinese industries
- AI, semiconductors, and microeletronics are all on the list of restricted investments
- Move is the latest salvo in tech trade war between US and China
The US government has issued new rules looking to restrict outbound investments in China’s high-tech industries.
The regulations, managed by the Treasury Department, are expected to require companies to notify the government of investments in sensitive technologies.
These sensitive technologies include areas such as artificial intelligence (AI), semiconductors, microelectronics, and quantum computing, particularly when these technologies could be used to advance military capabilities.
Biden administration focuses on National Security
These new rules are not entirely new as they build upon existing restrictions. In October 2022, the US implemented export controls to block China’s access to advanced semiconductor technologies, especially those essential for AI development. These export controls came alongside earlier tariff hikes on Chinese imports.
The U.S. government has been widening its efforts to curb the transfer of U.S. capital and expertise into China, addressing concerns over national security and military competition.
In 2018, the Trump administration initiated tariffs on Chinese goods and began restricting Chinese investments in US technology sectors, citing concerns over “forced technology transfer” and the potential military applications of advanced technologies.
Under the Biden administration, this did not change as the U.S. seeks to prevent technology and investments from supporting China’s military modernization, which officials worry could undermine America’s strategic interests.
The Treasury has been working on these restrictions since mid-2023, when it released initial proposals to potentially ban certain investments in China. The initial proposals drew public feedback from citizens and businesses, helping the department refine the scope of the rules.
The finalized regulations, outlined by the Department of the Treasury’s Office of Investment Security are expected to strike a balance between protecting U.S. security interests and avoiding unnecessary disruption to commercial relations.
“The potential military, intelligence, surveillance, and cyber-enabled applications of these technologies and products pose risks to U.S. national security particularly when developed by a country of concern such as the PRC,” the Treasury Department notification said.