White House Finalises China Tech Investment Curbs

The US presidential administration has finalised restrictions on investment by US individuals and companies into advanced technologies in China, including semiconductors, quantum computing and artificial intelligence, after more than a year of fine-tuning the measures.

The rules, proposed in June by the US Treasury, were based on an executive order signed by president Joe Biden in August 2023.

They go into effect on 2 January and are to be overseen by the Treasury’s newly created Office of Global Transactions.

The the “narrow set of technologies is core to the next generation of military, cybersecurity, surveillance, and intelligence applications”, the Treasury said.

Tech restrictions

The restrictions are intended to stop China from using US technologies to gain a military edge or to dominate emerging markets.

“US investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence, and cyber capabilities,” said senior Treasury official Paul Rosen.

The final framework is largely the same as the June proposal, with added clarity on technological parameters and expectations around compliance.

The restrictions are graded, with a ban on investment into more sensitive areas such as advanced semiconductor technologies, while investment into less critical sectors, such as legacy chips, require only that regulators be notified.

The rules are intended to complement existing US export restrictions that bar companies from selling cutting-edge semiconductors, chipmaking tools and other technologies to Chinese firms.

AI controls

The AI regulations include provisions on the computing power involved in training a given system and its intended use.

US individuals and companies are barred from funding Chinese AI firms focused on military applications, for instance, while other use cases may face a notification requirement or a ban.

In response to growing US restrictions, and those by US allies including Japan and the Netherlands, China has been redoubling its efforts to gain self-sufficiency in areas such as advanced chips and the tools required to manufacture them.

US-sanctioned Huawei Technologies has been leading the charge in many of those areas, and recently began staffing a massive research and development campus in the Shanghai area whose activities are to include chips and chipmaking tools, as well as wireless networks, the Internet of Things, smartphones, automobiles and energy.