The Treasury Department has unveiled a proposed rule aimed at monitoring and limiting U.S. investments in China related to artificial intelligence, computer chips, and quantum computing. This move follows President Joe Biden's executive order from August 2023, which focuses on controlling the access of 'countries of concern' to American funding for advanced technologies that could bolster their military and intelligence capabilities. China, Hong Kong, and Macau have been identified as countries of concern under this order.
The Biden administration's objective is to impede China, the world's second-largest economy, from developing technologies that could provide it with a military advantage or dominance in sectors like electric vehicles. In addition to the proposed rule, President Biden has imposed significant tariffs on Chinese electric vehicles, a decision with political implications as both Biden and former President Donald Trump vie to demonstrate their toughness on China.
The proposed rule outlines the necessary information that U.S. citizens and permanent residents must furnish when engaging in transactions in these specified areas, as well as the actions that would constitute violations of the restrictions. Notably, it would prohibit American investors from financing AI systems in China that could be utilized for military purposes such as weapons targeting and combat.
Experts in the field emphasize the importance of these details for companies and investors who will bear the responsibility of complying with the new outbound investment program. The private sector will need to undertake thorough due diligence and compliance efforts when making new investments in these sectors.
The U.S.-China Business Council, representing American companies operating in China, has expressed support for the Biden administration's efforts to safeguard U.S. national security while maintaining robust commercial ties with China for the benefit of American businesses, workers, and the economy.
The Treasury Department is inviting feedback on the proposal until August 4, 2024, after which a final rule is expected to be issued. Despite escalating tensions between the two nations, Biden administration officials have reiterated that they are not seeking to completely sever ties with China.
Recent incidents, including the shooting down of a suspected Chinese spy balloon by the U.S. military and the blocking of a Chinese-backed cryptocurrency mining firm from owning land near a Wyoming nuclear missile base, underscore the ongoing national security concerns between the United States and China.
