Key Takeaways
- If investments in China’s semiconductor and artificial intelligence businesses pose a threat to national security, the United States has completed plans to prohibit them.
- Beginning January 2, 2025, U.S. citizens, permanent residents, and businesses headquartered in the United States will be subject to the ban.
- Investments in some less sophisticated technology must be reported to the Treasury Department by U.S. investors.
New regulations that limit investments in China’s major technological sectors, including artificial intelligence, have been revealed by the U.S. Treasury Department.
These prohibitions, which take effect on January 2, 2025, will prohibit transactions involving AI, semiconductors, and quantum computing by U.S. citizens, permanent residents, and businesses. In light of growing geopolitical tensions, this action is being taken to safeguard national security interests.
U.S. investors are required to notify the Treasury of transactions in less advanced technologies.
The Treasury Department instructed investors to disclose transactions utilizing some less sophisticated technology that could represent a national security risk, the White House said in a news statement on October 28.
The most recent regulations, however, particularly target industries like semiconductors, microelectronics, and artificial intelligence (AI), which are essential for the creation of contemporary military and cybersecurity applications.
The People’s Republic of China and its Special Administrative Regions of Hong Kong and Macau are designated as countries of concern in the investment limitation.
The goal of these new regulations, according to senior officials in President Joe Biden’s administration, is to make sure that US investments don’t unintentionally aid enemies like China in their military modernization initiatives.
Avoiding the use of U.S. funds to develop technology that could jeopardize America’s security interests is crucial, according to Paul Rosen, assistant secretary of the Treasury for Investment Security.
According to him, U.S. investments—which frequently involve access to talent networks and administrative support—must not help nations of concern advance their military and intelligence capacities.
The way U.S. investments engage with international technology markets will be subject to additional scrutiny when these reporting requirements take effect on January 2, 2025.
This measure expands upon earlier Biden administration initiatives, like an executive order announced in August 2023 that targeted investments in vital industries.
President Biden voiced fears during that announcement that U.S. investments would help rivals build sensitive technologies that are essential for surveillance and military operations.
