The United States Treasury Department has introduced a new rule aimed at overseeing and restricting critical American investments in China, focusing specifically on artificial intelligence (AI), computer processors, silicon chips, and quantum computing.
This rule aligns with President Joe Biden’s executive order issued in August, targeting countries of concern that have access to US funds. Among these countries are Hong Kong, Macau, and China, with the US government expressing concerns that these funds could potentially enhance military, cyber, surveillance, and intelligence capabilities.
The Biden administration is determined to impede China’s technological advancements through this executive order, acknowledging China as the world’s second-largest economy. The fear is that technological progress could grant China a significant advantage in military capabilities and other sectors such as electric vehicles, posing a potential threat to US interests.
Assistant Secretary of the Treasury for Investment Security, Paul Rosen, emphasized that the proposed rule aims to safeguard national security by preventing US investments from supporting the development of sensitive technologies in countries that may pose a threat. In addition to the new rule, the Biden administration has imposed substantial tariffs on Chinese electric vehicles, solar cells, and batteries.
Despite the political implications, the decision seeks to prevent US industries from competing unfairly against subsidized rivals, underscoring the bipartisan effort to demonstrate who can better counter China. While China serves as both a US rival and a crucial trading partner, these measures aim to strike a delicate balance between economic cooperation and national security concerns.
The proposed rule outlines the information that US citizens and permanent residents must provide before engaging in relevant deals while clearly defining violations. It also prohibits US investors from investing in AI systems in the People’s Republic of China, citing concerns about potential military applications such as combat, weapon targeting, and surveillance.
The Treasury Department is inviting public feedback on the proposal until August 2024 before issuing a final rule. Secretary Janet Yellen has stressed that the US intends to maintain ties with China while acknowledging the strained relations between the two nations in recent years.
In response to national security risks, President Biden recently issued an order halting a cryptocurrency mining firm with Chinese backing from owning land near a nuclear missile base in Wyoming. Senator Bob Casey highlighted the risks associated with allowing American companies to invest in sectors like AI and semiconductors in China, emphasizing the importance of safeguarding national security and economic interests.
