- The U.S. Department of the Treasury has issued a final rule on an Executive Order restricting investment in certain Chinese industries
- AI, semiconductors and microelectronics are all on the restricted investment list
- Move is the latest salvo in the tech trade war between the US and China
The US government has issued new rules to restrict outward investment in China’s high-tech industries.
The regulations, administered 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 computers, especially when these technologies can be used to advance military capabilities.
The Biden administration is focused on national security
These new rules are not entirely new, as they build on existing restrictions. In October 2022, the US imposed export controls to block China’s access to advanced semiconductor technologies, especially those essential to the development of AI. These export controls came in addition to previous tariff increases on Chinese imports.
The U.S. government has expanded efforts to curb the transfer of American capital and expertise to China, addressing national security and military competition concerns.
In 2018, the Trump administration imposed tariffs on Chinese goods and began restricting Chinese investment in US technology sectors, citing concerns about “forced technology transfer” and the potential military applications of advanced technologies.
This did not change under the Biden administration as the US seeks to prevent technology and investment from supporting China’s military modernization, which officials fear could undermine America’s strategic interests.
The Treasury Department has been working on these restrictions since mid-2023, when it issued initial proposals to potentially ban certain investments in China. The initial proposals received public feedback from citizens and businesses, allowing the department to refine the scope of the rules.
The final regulationsas outlined by the Treasury Department’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 applications of these technologies and products pose risks to U.S. national security, especially when developed by a country of concern such as the People’s Republic of China,” the Treasury Department said.