New Draft Rule Targets US Funding in Sensitive Technologies
The US Department of the Treasury has unveiled a detailed draft rule aimed at restricting and overseeing American investments in Chinese sectors such as artificial intelligence (AI), semiconductors, and quantum computing. This rule expands on President Joe Biden’s executive order from August, which targets “countries of concern”—including China, Hong Kong, and Macau—and seeks to limit their access to US capital that could be used to advance military, surveillance, and cyber capabilities.
Limiting China’s Military and Tech Advancements
The Biden administration’s goal is to curb China’s ability to develop cutting-edge technologies that could offer a military advantage or economic dominance in sectors like electric vehicles (EVs). The proposed regulation would specifically ban US investors from supporting Chinese AI projects with potential military uses, such as weapons targeting, combat operations, or tracking systems. A senior Treasury official, speaking anonymously, highlighted these prohibited activities in a media briefing.
Compliance Measures and Political Context
The draft outlines compliance requirements for US citizens and permanent residents involved in relevant transactions. It also defines what actions would breach the new rules. This move complements other measures by Biden, such as imposing steep tariffs on Chinese EVs. The policy has political weight as both Biden and his Republican challenger, Donald Trump, campaign on strong stances against China, which remains a top economic and strategic rival.
Seeking Public Feedback Before Finalization
The Treasury Department will accept public comments on the proposal through August 4 before issuing a final version. Despite these controls, top administration officials, including Treasury Secretary Janet Yellen, stress that the US does not seek a full economic decoupling from China.
Escalating Tensions and Security Concerns
US-China relations have remained tense, especially after a suspected Chinese surveillance balloon was shot down over the East Coast in February 2023 following its flight over sensitive US military sites. Subsequent incidents have further fueled national security concerns. In another example, Biden recently blocked a Chinese-funded crypto mining project from owning land near a nuclear missile base in Wyoming, citing security threats due to its location.
