AI Investments: U.S. Finalises Rules to Restrict China

The Biden administration announced on Monday that it is finalising rules to restrict U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security.

The rules, first proposed in June by the U.S. Treasury and authorised by an executive order signed by President Joe Biden in August 2023, target three primary areas: semiconductors and microelectronics, quantum information technologies, and specific AI systems.

The rules, which will take effect on January 2, will be overseen by the Treasury’s new Office of Global Transactions. Treasury stated that the “narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications.”

According to Paul Rosen, a senior Treasury official, the rule encompasses technologies such as “advanced code-breaking computer systems and next-generation fighter jets. ” He added that “U.S. investments, including intangible support like managerial assistance and access to investment and talent networks, must not be used to enable countries of concern to advance their military, intelligence, and cyber capabilities.”

Also Read: U.S. Nears AI Investment Ban in China 

This rule forms part of a larger effort to prevent U.S. expertise from aiding China in developing advanced technologies and dominating global markets.

Commerce Secretary Gina Raimondo stated earlier this year that these rules are essential to prevent China from advancing military-related technologies.

The new regulations include an exemption for U.S. investment in publicly traded securities; however, officials noted that a prior executive order already restricts the buying and selling of securities in certain Chinese companies.

The House Select Committee on China has criticised major U.S. index providers for channelling billions of dollars from American investors into shares of Chinese companies believed to be advancing China’s military capabilities.