The U.S. government will limit investments in high-tech sectors in China to protect national security.
Investments in industries such as semiconductor manufacturing will be prohibited.
The U.S. Department of the Treasury has implemented a final regulation related to an executive order aimed at restricting investments in certain industrial sectors in China. Among the restricted investment areas are artificial intelligence, semiconductors, and microelectronics. This action adds to the growing tensions between the United States and China in the technological realm.
The new regulations, overseen by the Treasury, will require companies to notify the government about investments in technologies deemed sensitive. These technologies are those that could be used to strengthen military capabilities, such as artificial intelligence, semiconductors, microelectronics, and quantum computing.
Although these rules are not entirely new, as they are based on previous restrictions, they represent an important step in the Biden administration's strategy focused on national security. In October 2022, the United States had implemented export controls to limit China’s access to advanced semiconductor technologies essential for the development of artificial intelligence. These measures were complemented by previous tariff increases on Chinese imports.
Since 2018, U.S. authorities have intensified their efforts to restrict the flow of capital and knowledge to China in response to concerns about national security and military competition. The Trump administration initiated a similar process, imposing tariffs and restrictions on Chinese investments in the U.S. technology sector, citing "forced technology transfer" and the potential military applications of advanced technologies as reasons.
Under Biden's management, the policy has not changed, as the country seeks to prevent technologies and investments from contributing to China's military modernization, which could compromise U.S. strategic interests. Since mid-2023, the Treasury has been working on these restrictions, initially proposing the possibility of prohibiting certain investments in the Asian country and adjusting the scope of the rules based on the feedback received.
The final regulations, presented by the Treasury Department's Office of Investment Security, aim to balance the protection of U.S. security interests with the need to maintain stable trade relations. According to the Treasury Department's notice, "the potential military, intelligence, surveillance, and cyber applications of these technologies and products pose risks to U.S. national security, especially when developed by a concerning country like the People's Republic of China."
