US finalizes rules to curb AI investments in China and impose other restrictions
The Biden administration said 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, proposed by the U.S. Treasury Department in June, were determined by an executive order signed by President Joe Biden in August 2023 and covered three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems.
The new rules will come into effect from January 2 and will be overseen by the Treasury Department’s newly created Office of Global Transactions.
The Treasury Department said the “limited set of technologies is at the core of the next generation of military, cybersecurity, surveillance and intelligence applications.”
The rule covers technologies such as “advanced code-breaking computer systems or next-generation fighter jets,” said Paul Rosen, a senior Treasury Department official.
He added that “US investments, including the intangible benefits such as management support and access to investment and talent networks that often accompany such capital flows, should not be used to help countries of concern develop their military, intelligence and cyber capabilities. ”
The rule is part of a broader effort to prevent American knowledge from helping the Chinese develop advanced technology and dominate global markets.
Commerce Secretary Gina Raimondo said earlier this year that the rules are crucial to prevent China from developing military technologies.
The new rules include an exemption allowing U.S. investments in listed securities, but the officials said the U.S. already has authorities under a previous executive order banning the buying and selling of securities of certain designated Chinese companies.
The House Committee on China has criticized major U.S. index providers for pouring billions of dollars from U.S. investors into shares of Chinese companies that the U.S. says facilitate the development of China’s military.
© Thomson Reuters 2024
