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The United States has finalized new rules to limit investments in key Chinese technology sectors due to national security concerns.
Let’s bring you up to speed: Earlier this year, the US Treasury expanded its focus on national security by intensifying scrutiny of foreign investments in critical technology sectors, particularly those involving China. Previously, the Treasury’s Committee on Foreign Investment in the United States (CFIUS) had primarily reviewed and, when necessary, blocked foreign investments in American companies with sensitive technologies. However, as concerns grew over the potential for US capital to support China’s advancements in artificial intelligence, semiconductors, and quantum computing, the Treasury began exploring outbound investment restrictions. Eventually, it announced that it would finalize new rules later this year.
What’s the deal: Today, the US Treasury formalized new restrictions that bar American citizens, residents, and companies from investing in artificial intelligence, semiconductors, and quantum computing in China. Effective January 2, these measures require investors to abstain from transactions involving technologies deemed critical to national security and to notify the Treasury of investments in some less advanced yet sensitive areas. The restrictions aim to prevent US financial and strategic resources from supporting technology advancements that could enhance China’s military, intelligence, and cyber capabilities.
What US officials are saying: Paul Rosen, the assistant secretary of the Treasury 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 US investment is not exploited to advance the development of key technologies by those who may use them to threaten our national security.”
China responds: China’s Ministry of Foreign Affairs accused the US of engaging “in anti-globalization and de-sinicization.” They added, “Beijing is strongly dissatisfied and firmly opposes the United States’ insistence on introducing restrictions on investment in China, and has lodged solemn representations with the United States.”
