US Finalizes Rules to Curb AI Investments in China, Citing National Security Concerns

US Finalizes Rules to Curb AI Investments in China, Impose Other Restrictions

By David Shepardson, Michael Martina and Trevor Hunnicutt WASHINGTON (Reuters) - The Biden administration said on Monday it is finalizing rules that will limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security. The rules, which were proposed in June by the U.S. Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The new rules are effective Jan. 2 and will be overseen by Treasury's newly created Office of Global Transactions. Treasury said the "narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications." The rule covers technologies like "cutting-edge code-breaking computer systems or next-generation fighter jets," added Paul Rosen, a senior Treasury official. He added that "U.S. 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 U.S. 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 U.S. investment in publicly traded securities, but the officials said the U.S. 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 U.S. investors into stocks of Chinese companies that the U.S. believes are facilitating the development of China's military. (Reporting by David Shepardson, Michael Martina and Trevor Hunnicutt; Editing by Lisa Shumaker)

US finalizes rules to curb AI investments in China, impose other restrictions

WASHINGTON (Reuters) - The Biden administration said on Monday it is finalizing rules that will limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security. The rules, which were proposed in June by the U.S. Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The new rules are effective Jan. 2 and will be overseen by Treasury's newly created Office of Global Transactions. Treasury said the "narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications." The rule covers technologies like "cutting-edge code-breaking computer systems or next-generation fighter jets," added Paul Rosen, a senior Treasury official. He added that "U.S. 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 U.S. 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 U.S. investment in publicly traded securities, but the officials said the U.S. 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 U.S. investors into stocks of Chinese companies that the U.S. believes are facilitating the development of China's military. (Reporting by David Shepardson, Michael Martina and Trevor Hunnicutt; Editing by Lisa Shumaker) By David Shepardson, Michael Martina and Trevor Hunnicutt

US finalises rules to curb AI investments in China, impose other restrictions

The rules, which were proposed in June by the US Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems.The Biden administration said on Monday it is finalizing rules that will limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security. The rules, which were proposed in June by the U.S. Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The new rules are effective Jan. 2 and will be overseen by Treasury's newly created Office of Global Transactions. Treasury said the "narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications." The rule covers technologies like "cutting-edge code-breaking computer systems or next-generation fighter jets," added Paul Rosen, a senior Treasury official. He added that "U.S. 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 U.S. 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 U.S. investment in publicly traded securities, but the officials said the U.S. 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 U.S. investors into stocks of Chinese companies that the U.S. believes are facilitating the development of China's military.

US Finalises Rules to Curb AI Investments in China, Impose Other Restrictions

The rules help prevent China's developing military-related technologies The Biden administration said on Monday it is finalising rules that will limit US investments in artificial intelligence and other technology sectors in China that could threaten US national security. The rules, which were proposed in June by the US Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The new rules are effective January 2 and will be overseen by Treasury's newly created Office of Global Transactions. Treasury said the "narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications." The rule covers technologies like "cutting-edge code-breaking computer systems or next-generation fighter jets," added Paul Rosen, a senior Treasury official. 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 U.S. 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.

U.S. finalizes rules to curb AI investments in China, impose other restrictions

A Chinese flag is displayed next to a "Made in China" sign seen on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023. The Biden administration said on Monday it is finalizing rules that will limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security. The rules, which were proposed in June by the U.S. Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The new rules are effective Jan. 2 and will be overseen by Treasury's newly created Office of Global Transactions. Treasury said the "narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications." The rule covers technologies like "cutting-edge code-breaking computer systems or next-generation fighter jets," added Paul Rosen, a senior Treasury official.

Biden to stop U.S. citizens from helping China's AI sector find talent as part of widened investment ban

The U.S. Treasury Department, seeking to keep the Chinese military from gaining an edge in advanced technologies, issued a rule Monday to restrict and monitor American investments in China in artificial intelligence, computer chips and quantum computing. The finalized rule arises from an executive order issued in August 2023 by President Joe Biden. The order sought to limit the access that "countries of concern" -- specifically China including Hong Kong and Macao -- have to American dollars to fund technologies that could be used, for example, to break codes or develop next-generation fighter jets. It will take effect Jan. 2. "U.S. investments ... must not be used to help countries of concern develop their military, intelligence and cyber capabilities"' said Paul Rosen, assistant Treasury secretary for investment security. He noted the investments can mean more than just money: they can deliver "intangible benefits," including managerial help and assistance finding top talent and tapping other sources of financing. Blocking China's high-tech ambitions is one of the few issues that enjoys broad support in Washington from both Republicans and Democrats. Biden in May slapped a stiff tariff on electric vehicles from China. He also has imposed export controls to keep the Chinese from acquiring advanced computer chips and the equipment to produce them. Former President Donald Trump has vowed to dramatically increase taxes on all imports from China if voters send him back to the White House. A Chinese Foreign Ministry spokesperson said Tuesday that the government had lodged a protest with the U.S. over the latest action. "China strongly deplores and firmly opposes the U.S. rolling out restrictions on investment in China," Lin Jian said at a daily briefing in Beijing. In Hong Kong, the city's leader said the move undermined normal investment and trade and would cause damage to the global supply chain. "In pursuing their political agenda, American politicians are harming not only others but also the interests of their own country, their people and their businesses. They will have to face the consequences of their actions," John Lee said, noting that the U.S. has enjoyed a trade surplus of $472 billion with Hong Kong in the past 10 years. The Biden administration sought comment from businesses and from U.S. allies before putting out the final version. In addition to blocking investments, the rule requires Americans and companies in the United States to notify the U.S. government of transactions that involve "technologies and products that may contribute to a threat to the national security of the United States." Violators can be hit with fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. Treasury is setting up an Office of Global Transactions to oversee the new rule.

US finalizes rules to curb AI investments in China, impose other restrictions

A central processing unit (CPU) semiconductor chip is displayed among flags of China and U.S., in this illustration picture taken Feb. 17, 2023. Reuters-Yonhap The Biden administration said on Monday it is finalizing rules that will limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security. The rules, which were proposed in June by the U.S. Treasury, were directed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The new rules are effective Jan. 2 and will be overseen by Treasury's newly created Office of Global Transactions. Treasury said the "narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications." The rule covers technologies like "cutting-edge code-breaking computer systems or next-generation fighter jets," added Paul Rosen, a senior Treasury official. He added that "U.S. 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." Korea vows active response to US investment curbs on China 2024-10-29 10:01 | Economy The rule is part of a broader push to prevent U.S. 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 U.S. investment in publicly traded securities, but the officials said the U.S. 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 U.S. investors into stocks of Chinese companies that the U.S. believes are facilitating the development of China's military. (Reuters)

Treasury issues rule to block US investors from helping China develop advanced military technology

WASHINGTON -- The U.S. Treasury Department, seeking to keep the Chinese military from gaining an edge in advanced technologies, issued a rule Monday to restrict and monitor American investments in China in artificial intelligence, computer chips and quantum computing. The finalized rule arises from an executive order issued in August 2023 by President Joe Biden. The order sought to limit the access that "countries of concern'' -- specifically, China, Hong Kong and Macau -- have to American dollars to fund technologies that could be used, for example, to break codes or develop next-generation fighter jets. It will take effect Jan. 2. "U.S. investments ... must not be used to help countries of concern develop their military, intelligence and cyber capabilities''' said Paul Rosen, assistant Treasury secretary for investment security. He noted the investments can mean more than just money; they can deliver "intangible benefits,'' including managerial help and assistance finding top talent and tapping other sources of financing. Blocking China's high-tech ambitions is one of the few issues that enjoys broad support in Washington from both Republicans and Democrats. Biden in May slapped a stiff tariff on electric vehicles from China. He also has imposed export controls to keep the Chinese from acquiring advanced computer chips and the equipment to produce them. Former President Donald Trump has vowed to dramatically increase taxes on all imports from China if voters send him back to the White House. The Biden administration sought comment from businesses and from U.S. allies before putting out the final version. In addition to blocking investments, the rule requires Americans and companies in the United States to notify the U.S. government of transactions that involve "technologies and products that may contribute to a threat to the national security of the United States.'' Violators can be hit with fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. Treasury is setting up an Office of Global Transactions to oversee the new rule.

Treasury finalizes prohibitions on U.S. investment in Chinese tech

The limits on U.S. investors' ability to fund projects that could aid China's military take effect on Jan. 2. The Biden administration on Monday finalized regulations limiting U.S. investment and technical assistance in Chinese development of cutting-edge technologies with military applications. The new Treasury Department rules, designed to implement President Joe Biden's August 2023 executive order on the subject, target U.S. support for three sectors: semiconductors and microelectronics; quantum computing; and artificial intelligence. The administration says those technologies are "core to the next generation of military, cybersecurity, surveillance and intelligence operations." Existing U.S. regulations restrict the export of such products to China and other potential adversaries, which the administration describes as "countries of concern." The regulations, which take effect Jan. 2, prohibit U.S. financing of some ventures and require Americans to report their involvement in others. A key aim is to prevent China from enjoying the "intangible benefits" believed to come with U.S. financial support, including "enhanced standing and prominence, managerial assistance, investment and talent networks, market access." Indeed, despite slowing economic growth, Chinese public and private funds have plenty of capital. Nearly three-quarters of the money pumped into Chinese AI projects between 2015 and 2021 came from Chinese investors, according to Georgetown University's Center for Security and Emerging Technology. The regulations come as U.S. investment in China has been declining for years. U.S. venture capital in China reached a 10-year low of $1.3 billion in 2022, down from a peak of $14.4 billion in 2018, according to the Rhodium Group in New York. One independent expert said that the regulations are likely to be scrapped and replaced with tougher limits if former president Donald Trump wins a second term in office. "It's completely worthless to finalize implementation of a presidential [order] eight days before an election where the president isn't running," Derek Scissors, a China specialist at the American Enterprise Institute, said via email. "Three years to do something that could have taken three months. It was intentional." The rules capped a lengthy internal debate over precisely where to set the limits for U.S. involvement in fast-developing technology sectors. For example, only artificial intelligence projects using a specified amount of computing power are covered by the new prohibition. Under the Treasury regulations, Americans remain able to invest in publicly traded Chinese companies or participate in venture capital or private equity funds with stakes worth up to $2 million.

Treasury issues rule to block US investors from helping China develop advanced military technology

WASHINGTON (AP) -- The U.S. Treasury Department, seeking to keep the Chinese military from gaining an edge in advanced technologies, issued a rule Monday to restrict and monitor American investments in China in artificial intelligence, computer chips and quantum computing. The finalized rule arises from an executive order issued in August 2023 by President Joe Biden. The order sought to limit the access that "countries of concern'' -- specifically, China, Hong Kong and Macau -- have to American dollars to fund technologies that could be used, for example, to break codes or develop next-generation fighter jets. It will take effect Jan. 2. "U.S. investments ... must not be used to help countries of concern develop their military, intelligence and cyber capabilities''' said Paul Rosen, assistant Treasury secretary for investment security. He noted the investments can mean more than just money; they can deliver "intangible benefits,'' including managerial help and assistance finding top talent and tapping other sources of financing. Blocking China's high-tech ambitions is one of the few issues that enjoys broad support in Washington from both Republicans and Democrats. Biden in May slapped a stiff tariff on electric vehicles from China. He also has imposed export controls to keep the Chinese from acquiring advanced computer chips and the equipment to produce them. Former President Donald Trump has vowed to dramatically increase taxes on all imports from China if voters send him back to the White House. The Biden administration sought comment from businesses and from U.S. allies before putting out the final version. In addition to blocking investments, the rule requires Americans and companies in the United States to notify the U.S. government of transactions that involve "technologies and products that may contribute to a threat to the national security of the United States.'' Violators can be hit with fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. Treasury is setting up an Office of Global Transactions to oversee the new rule.

US finalizes curbs on investing in Chinese tech

Washington (AFP) - The administration of President Joe Biden has finalized curbs on US investments in sensitive technologies like semiconductors in China that pose a threat to national security, the Treasury Department said Monday. The new rules, which take effect on January 2 next year, will prohibit US-headquartered firms, citizens, and permanent residents from engaging in transactions involving cutting-edge technology like semiconductors, artificial intelligence (AI), and quantum computing, the Treasury announced in a statement. Investors will also be required to inform the Treasury about investments in some less advanced technologies "that may contribute to the threat to the national security of the United States," the statement added. This will include investment in legacy semiconductors, a senior administration official told reporters on Monday. "Artificial intelligence, semiconductors, and quantum technologies are fundamental to the development of the next generation of military, surveillance, intelligence and certain cybersecurity applications," Treasury assistant secretary for investment security Paul Rosen said in a statement. "This final rule takes targeted and concrete measures to ensure that US investment is not exploited to advance the development of key technologies by those who may use them to threaten our national security," he added. The rules are the result of an executive order signed by Biden last August aimed at restricting certain US investments in sensitive high-tech areas in China, including in Hong Kong and Macau. In response, China's foreign ministry called the executive order an attempt to "engage in anti-globalization and de-sinicization," adding that Beijing was "strongly dissatisfied" and reserved the right to safeguard its interests.

Treasury Issues Rule Limiting US Investments in China for Military Tech

The U.S. Treasury Department issued a new rule this week seeking to limit U.S. investments in China for military technology. On Monday, the Treasury Department announced a new rule aimed at restricting and monitoring American investments in China's artificial intelligence, semiconductor, and quantum computing sectors. The move is part of an effort to prevent the Chinese military from gaining an advantage in advanced technologies. The Rule: The new rule stems from an executive order issued by President Joe Biden in August 2023, aimed at curbing the flow of U.S. capital to "countries of concern," including China, Hong Kong, and Macau. The order targets technologies with military applications, such as code-breaking and next-generation fighter jets. The restrictions are set to take effect on January 2. Along with restricting investments, the rule mandates that U.S. individuals and companies report transactions involving "technologies and products that may contribute to a threat to the national security of the United States" to the federal government. Violators could face fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. The Treasury Department is establishing an Office of Global Transactions to enforce the new regulations. Past Restrictions: In May, Biden imposed steep tariffs on electric vehicles imported from China and introduced export controls to block Chinese access to advanced computer chips and the machinery needed to produce them. Meanwhile, former President Donald Trump has pledged to sharply increase taxes on all Chinese imports if re-elected. Before releasing the final version, the Biden administration consulted with businesses and U.S. allies for feedback. Curtailing China's high-tech ambitions is one of the few issues with strong bipartisan support in Washington. Views: In a statement, Paul Rosen, Assistant Secretary for Investment Security, said, "The Biden-Harris Administration is committed to protecting America's national security and keeping critical advanced technologies out of the hands of those who may use them to threaten our national security. Artificial intelligence, semiconductors, and quantum technologies are fundamental to the development of the next generation of military, surveillance, intelligence and certain cybersecurity applications like cutting-edge code-breaking computer systems or next generation fighter jets. This Final Rule takes targeted and concrete measures to ensure that U.S. investment is not exploited to advance the development of key technologies by those who may use them to threaten our national security." "U.S. 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," Rosen added. This article includes reporting from the Associated Press. Related Articles

Treasury Issues Rule to Block US Investors From Helping China Develop Advanced Military Technology

WASHINGTON (AP) -- The U.S. Treasury Department, seeking to keep the Chinese military from gaining an edge in advanced technologies, issued a rule Monday to restrict and monitor American investments in China in artificial intelligence, computer chips and quantum computing. The finalized rule arises from an executive order issued in August 2023 by President Joe Biden. The order sought to limit the access that "countries of concern'' -- specifically, China, Hong Kong and Macau -- have to American dollars to fund technologies that could be used, for example, to break codes or develop next-generation fighter jets. It will take effect Jan. 2. "U.S. investments ... must not be used to help countries of concern develop their military, intelligence and cyber capabilities''' said Paul Rosen, assistant Treasury secretary for investment security. He noted the investments can mean more than just money; they can deliver "intangible benefits,'' including managerial help and assistance finding top talent and tapping other sources of financing. Blocking China's high-tech ambitions is one of the few issues that enjoys broad support in Washington from both Republicans and Democrats. Biden in May slapped a stiff tariff on electric vehicles from China. He also has imposed export controls to keep the Chinese from acquiring advanced computer chips and the equipment to produce them. Former President Donald Trump has vowed to dramatically increase taxes on all imports from China if voters send him back to the White House. The Biden administration sought comment from businesses and from U.S. allies before putting out the final version. In addition to blocking investments, the rule requires Americans and companies in the United States to notify the U.S. government of transactions that involve "technologies and products that may contribute to a threat to the national security of the United States.'' Violators can be hit with fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. Treasury is setting up an Office of Global Transactions to oversee the new rule. Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Treasury issues rule to block US investors from helping China develop advanced military technology

WASHINGTON (AP) -- The U.S. Treasury Department, seeking to keep the Chinese military from gaining an edge in advanced technologies, issued a rule Monday to restrict and monitor American investments in China in artificial intelligence, computer chips and quantum computing. The finalized rule arises from an executive order issued in August 2023 by President Joe Biden. The order sought to limit the access that "countries of concern" -- specifically, China, Hong Kong and Macau -- have to American dollars to fund technologies that could be used, for example, to break codes or develop next-generation fighter jets. It will take effect Jan. 2. "U.S. investments ... must not be used to help countries of concern develop their military, intelligence and cyber capabilities"' said Paul Rosen, assistant Treasury secretary for investment security. He noted the investments can mean more than just money; they can deliver "intangible benefits," including managerial help and assistance finding top talent and tapping other sources of financing. Blocking China's high-tech ambitions is one of the few issues that enjoys broad support in Washington from both Republicans and Democrats. Biden in May slapped a stiff tariff on electric vehicles from China. He also has imposed export controls to keep the Chinese from acquiring advanced computer chips and the equipment to produce them. Former President Donald Trump has vowed to dramatically increase taxes on all imports from China if voters send him back to the White House. The Biden administration sought comment from businesses and from U.S. allies before putting out the final version. In addition to blocking investments, the rule requires Americans and companies in the United States to notify the U.S. government of transactions that involve "technologies and products that may contribute to a threat to the national security of the United States." Violators can be hit with fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. Treasury is setting up an Office of Global Transactions to oversee the new rule.

White House limits AI and chip investments to China over national security concerns - SiliconANGLE

White House limits AI and chip investments to China over national security concerns The Treasury Department today issued a final rule which serves to restrict and monitor U.S. tech investments in China in an effort to bolster national security. The main areas of investment are artificial intelligence, computer chips, and quantum computing. The finalized rules build upon an executive order issued by President Biden in 2023 which blocked Americans and American firms from investing in Chinese sectors to thwart China's military and intelligence capabilities. Officials at the White House said such investments "pose a particularly acute national security risk" to the U.S. Paul Rosen, the assistant secretary of Treasury for investment security, explained that one of the dangers lies in China's ability to vastly improve cybersecurity applications related to code-breaking computer systems or next-generation fighter jets. He said they are also "intangible benefits", which include helping China's day-to-day operations, finding other forms of financing, and hiring the best talent. "The People's Republic of China has a stated goal, as you know, to develop key sensitive technologies that will directly support the PRC's military modernization and related activities, including weapons development, and has exploited U.S. investments to develop domestic military and intelligence capabilities," said another White House official. The rule is one of the few areas that has backing from both Republicans and Democrats in what has become a tense relationship between China and the U.S. amidst projections of a future war. Former President Donald Trump has said he'll vastly increase taxes on all imports from China if he becomes President for a second time while President Biden has tried to slow down China's microchip production. Under the new rule, anyone in the U.S. thinking about investing in China will have to notify the Treasury Department if the business relates to the stated technologies. Violators can be fined up to $368,136 or twice the value of the transaction, whichever is higher. "This Final Rule takes targeted and concrete measures to ensure that U.S. investment is not exploited to advance the development of key technologies by those who may use them to threaten our national security," said Rosen.

U.S. Finalizes New Restrictions on Sensitive Tech Investments in China

The U.S. Treasury Department issued final rules that limit and screen U.S. investments in China in sensitive technology areas. The restrictions will take effect on Jan. 2. Under the new rules, certain U.S. investments in semiconductors, artificial intelligence and quantum computing in mainland China, Hong Kong and Macau would be prohibited while other deals in those areas would require a

Chinese chips, quantum and AI now on US investment blacklist

The US treasury department finalized a rule on Monday that limits domestic entities' investment in Chinese semiconductors and microelectronics, quantum information technologies, and AI. The original rules were proposed in June after being introduced in August 2023 on grounds of national security. In addition to prohibiting transactions considered to be an acute threat, the regulations also require US-based individuals and companies to notify the Treasury about others that may contribute to security risks. Those notifications can be completed using electronic filing. They are now set to go into effect on January 2 and are inclusive of Macau and Hong Kong, as well as mainland China. "The Biden-Harris Administration is committed to protecting America's national security and keeping critical advanced technologies out of the hands of those who may use them to threaten our national security," stated Assistant Secretary for Investment Security Paul Rosen. Rosen reasoned that the named technologies are "fundamental to the development of the next generation of military, surveillance, intelligence and certain cybersecurity applications like cutting-edge code-breaking computer systems or next generation fighter jets." He added that US investment should not be exploited to advance their development by adversaries. But it's not just the money that is inadvertently being used for Beijing's gain. Rosen, and the US Treasury [PDF] also alleged that investment comes with "intangible benefits" like managerial assistance and access to investment and talent networks. When it comes to semiconductors and microelectronics, transactions involving specific electronic design automation software, certain fabrication and advanced packaging tools, the design or fabrication of advanced integrated circuits, advanced packaging techniques, and supercomputers are prohibited. Those related to the design, fabrication, or packaging of integrated circuits not covered by these prohibitions must be reported to the government. Banned quantum transactions include those related to the development of quantum computers or production of their critical components, as well as their sensing platforms, networks, and communication systems. For AI, its end use is what will get it banned. Also on the prohibited transaction list is the development of any AI system trained using computing power greater than 10 computational operations. Transactions involving AI with computing power less than that but greater than 10 computational operations needs to be disclosed to the government, as are those "designed or intended to be used for certain end uses or applications." The Department is a little vague and muddy in some communications as to what end uses investors should be wary of. A deeper dive sees the actual rule [PDF] outline what areas the government is concerned about. That includes anything where AI systems could "enable the military modernization of countries of concern- including weapons, intelligence and surveillance capabilities - and those that have applications in areas such as cybersecurity and robotics." Also included are software and hardware that incorporate such AI systems. The rule notes the US government has received feedback from stakeholders who are concerned about the breadth of the definition. It reveals that was partially intentional - to create a scope wide enough to contain all AI-related transactions that could benefit China's military aspirations, but that only those developing or substantially modifying these type of AI systems are impacted. There are some exceptions to the new regulations, for example publicly traded securities, derivatives, and certain LP investments - and complete China buyouts are exempt. Violators may face fines up to $368,136 or twice the value of the prohibited transaction, whichever amount is higher. ®

Biden Finalizes Curbs on US Investment in Chinese Chip, AI Tech

The Biden administration finalized restrictions on investments by US individuals and companies into advanced technology in China, including semiconductors, quantum computing and artificial intelligence. The rules, which come after more than a year of deliberation, ban some investments into those industries and require the US government to be notified about others. The goal is to prevent American capital and know-how from helping China develop critical technologies that could lend Beijing a military edge.

U.S. proposals to curb AI, semiconductor investment into China under final review

Inside one of Equinix's internal operations at Equinix Data Center in Ashburn, Virginia, on May 9, 2024. Measures aimed at curbing U.S. investments into China in sensitive technologies are in the final stage of review, a U.S. government update showed. Under this set of rules, the Treasury Department will require notification of outbound investments into China in sensitive technologies including artificial intelligence, semiconductors, microelectronics and quantum computing that can be employed for developing military capabilities. The final rules will likely be released within the "next week or so," according to Reuters. The proposals are part of the Joe Biden administration's efforts to restrict the flow of U.S. capital, technology and expertise into China that could support its military modernization and undermine U.S. national security. In June last year, U.S. Treasury Department released proposals that include potential outright bans on certain investments into China in these cutting-edge technologies. "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. Former Treasury official Laura Black said the department could be trying to make the rules official before the presidential election -- which is set to take place on Nov. 5 -- Reuters reported. The Treasury had invited citizens and companies to submit suggestions for further defining the regulation's scope, as well opinions on transactions that should be restricted. The U.S. passed sweeping export controls starting in October 2022 aimed at restricting China's access to advanced semiconductor technologies, particularly those used in AI applications, and has imposed a series of hefty tariffs on Chinese imports.

U.S. to Curb AI Investment in China Soon

U.S. rules that will ban certain U.S. investments in artificial intelligence in China are under final review, according to a government posting, suggesting the restrictions are coming soon. The rules, which will also require U.S. investors to notify the Treasury Department about some investments in AI and other sensitive technologies, stem from an executive order signed by President Joe Biden in August 2023 that aims to keep American investors' know-how from aiding China's military.

US Rules Limiting AI Investing in China Imminent

The rules follow an executive order signed by President Joe Biden in August 2023 limiting U.S. investing in China that could strengthen the Asian nation's military while weakening American national security. U.S. rules that will limit some American investing into sensitive technologies including artificial intelligence (AI) in China are imminent, with a U.S. government update in the last review stage. The final rules will be released in the "next week or so" following an Office of Management and Budget review, Reuters said. The rules follow an executive order signed by President Joe Biden in August 2023 limiting U.S. investing in China that could strengthen the Asian nation's military while weakening American national security. According to that order, the U.S. Department of the Treasury was considering barring investing into China's quantum information technologies and some advanced technologies like "semiconductors and microelectronics," and requiring notification for investment into AI. The proposals were put forward for public feedback last year.

New Rules for U.S. Tech Investments in China Under Final Review

U.S. rules that would limit certain U.S. investments in China in sensitive technology areas such as artificial intelligence are now going through a final regulatory review, according to a posting on the U.S. government's website. The posting suggests that the final rules could be released very soon. Under the rules, certain U.S. investments in areas such as AI, semiconductors and quantum

US cements rule to ban high-tech exports to China

The Treasury Department cemented a final rule on Monday that prevents those in the United States from exporting certain technologies to China that could bolster the nation's military and threaten U.S. national security. The rule builds upon President Biden's executive order issued in August of 2023 that blocked Americans from investing in Chinese sectors due to the chance the investments could improve the country's military or intelligence capabilities. The technology covered in the rule includes semiconductors and microelectronics, quantum information technologies and artificial intelligence, all of which "pose a particularly acute national security risk to the United States," senior administration officials told reporters Monday. "Artificial intelligence, semiconductors, and quantum technologies are fundamental cybersecurity applications like cutting-edge code-breaking computer systems or next-generation fighter jets," wrote Paul Rosen, the assistant secretary of Treasury for Investment Security. The final rule lays out "operative regulations and a detailed explanatory discussion" on their purpose and use, the Treasury Department said. "The People's Republic of China has a stated goal, as you know, to develop key sensitive technologies that will directly support the PRC's military modernization and related activities, including weapons development, and has exploited U.S. investments to develop domestic military and intelligence capabilities," an administration official said. Under the final rule, individuals in the U.S. will be required to notify the Treasury Department of certain other transactions involving the covered technology that potentially poses a threat to national security. The move marks the Biden administration's latest attempt to curb technology developments by China and prevent the nation from having a military or technological edge over the U.S. Contention between the U.S. and China has flared up in recent years with regard to multiple issues -- including the U.S. government's sanctions on Chinese citizens and officials, restricted import of Chinese semiconductors, the debate over the Chinese-owned social media platform TikTok, and Taiwan. In May, Biden ordered the closure of a Chinese-backed cryptocurrency mine near a Wyoming nuclear missile base, citing a risk to national security.