Biden Administration to Finalize Investment Restrictions in China

By David Shepardson, Michael Martina, and Trevor Hunnicutt

WASHINGTON (Reuters) – The Biden administration announced on Monday that it is finalizing rules to limit U.S. investments in artificial intelligence and other technology sectors in China that pose a threat to U.S. national security.

The proposed rules, initiated by the U.S. Treasury in June and directed by an executive order from President Joe Biden in August 2023, focus on three key sectors: semiconductors and microelectronics, quantum information technologies, and certain AI systems.

Effective January 2, the new regulations will be managed by the Treasury's newly established Office of Global Transactions.

Treasury officials indicated that this "narrow set of technologies is essential for the next generation of military, cybersecurity, surveillance, and intelligence applications."

The regulations will impact technologies such as advanced code-breaking systems and next-generation fighter jets, according to Paul Rosen, a senior official at the Treasury.

Rosen further explained that U.S. investments—including intangible benefits such as managerial assistance and access to talent networks—should not aid nations in developing their military, intelligence, and cyber capabilities.

These rules are part of a larger strategy to prevent the transfer of U.S. expertise that could enable China to develop advanced technology and achieve global market dominance.

Commerce Secretary Gina Raimondo has stated that these regulations are vital to prevent China from advancing military-related technologies.

While the rules allow for U.S. investments in publicly traded securities, officials noted that prior executive orders already impose restrictions on transactions with certain designated Chinese companies.

Additionally, the House select committee on China has expressed concerns over American index providers channeling billions into Chinese firms suspected of assisting in military development.