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The Treasury Department has created its first draft of a new rule that would implement significant restrictions on US investments in China, focusing on artificial intelligence, computer chips, and quantum computing.

The new rule would require US citizens and permanent residents to disclose when involved in certain transactions. It would also ban American investors from financing AI systems in China that could be utilized for military purposes such as weapons targeting, combat operations, and location tracking.

This proposal, released on Friday, directly responds to President Joe Biden’s executive order from August, which seeks to curb the access of “countries of concern” to American capital that could be used to advance technologies enhancing their military, intelligence, surveillance, and cyber capabilities. Specifically, China, Hong Kong, and Macau were identified as such countries.

The Treasury Department is open to public comments on the proposal until August 4, after which it plans to finalize the rule. Despite officials like Treasury Secretary Janet Yellen stating that the US does not intend to “decouple” from China, tensions have been escalating.


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