CHINA WATCHU.S. Finalizes Rule Restricting Investment in Chinese Tech Firms
The Treasury Department on Monday finalized a new rule meant to prevent U.S.-based people and companies from investing in the development of a range of advanced technologies in China, thereby preventing Beijing from accessing cutting-edge expertise and equipment.
The Treasury Department on Monday finalized a new rule meant to prevent U.S.-based people and companies from investing in the development of a range of advanced technologies in China, thereby preventing Beijing from accessing cutting-edge expertise and equipment.
The rule, which implements an executive order signed by President Joe Biden in 2023, focuses particularly on advanced semiconductors and microelectronics and the equipment used to make them, technology used in quantum computing, and artificial intelligence systems.
When it takes effect on January 2, the rule will prohibit certain transactions in semiconductors, microelectronics and artificial intelligence. It also establishes mandatory reporting requirements for transactions that are not banned outright.
In the field of quantum computing, the rule is more far-reaching, banning all transactions “related to the development of quantum computers or production of any critical components required to produce a quantum computer,” as well as the development of other quantum systems. Unlike the fields of AI and semiconductors, the rule does not allow for transactions that can be completed so long as they are reported to the government.
The rule also announced the creation of the Office of Global Transactions within Treasury’s Office of Investment Security, which will administer the Outbound Investment Security Program.
Justification and Opposition
“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,” Paul Rosen, assistant secretary for investment security, said in a statement.
“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,” Rosen said.
Beijing has repeatedly complained about U.S. technology policy, arguing that the U.S. is dedicated to preventing China’s rise as a global power. In a press conference on Tuesday, Chinese Foreign Ministry spokesperson Lin Jian reiterated China’s longstanding objections to U.S. efforts to withhold advanced technology from Chinese companies.
“China deplores and rejects the U.S.’s Final Rule to curb investment in China,” Lin said. “China has protested to the U.S. and will take all measures necessary to firmly defend its lawful rights and interests.”
