WASHINGTON: The United States Department of the Treasury has proposed to restrict and monitor US investments in China for artificial intelligence (AI), computer chips and quantum computing.
The draft rule follows President Joe Biden’s August executive order aimed at limiting the access “countries of concern” have to American funds for advanced technologies that could bolster their military, intelligence, surveillance, and cyber capabilities. The order specifically names China, Hong Kong, and Macau as countries of concern.
The Biden administration’s move is part of a broader strategy to hinder China’s development of technologies that could provide a military advantage or allow it to dominate emerging sectors like electric vehicles (EVs). Besides the proposed rule, Biden has imposed a significant tariff on Chinese EVs, a politically charged issue as both Biden and his Republican opponent Donald Trump aim to demonstrate their toughness on China, a major geopolitical rival and trading partner.
The proposed rule requires US citizens and permanent residents to report specific information when engaging in transactions within these areas and defines what constitutes a violation of the restrictions. It notably prohibits American investments in Chinese AI systems that could be used for military applications such as weapons targeting, combat, and location tracking, as stated by a senior Treasury official who spoke on the condition of anonymity.
The Treasury Department is seeking public comments on the proposal until August 4, after which it will issue a final rule. While Biden administration officials, including Treasury Secretary Janet Yellen, have emphasized that they do not seek to “decouple” from China, tensions between the two countries have escalated in recent years.
This escalation includes incidents such as the US military’s February 2023 shooting down of a suspected Chinese spy balloon off the East Coast, after it had traversed sensitive military sites across North America, prompting threats of repercussions from China. Such security-related incidents have become increasingly common between the two sides.
