Home Technology US introduces regulations to prevent Americans from investing in Chinese military technology.

US introduces regulations to prevent Americans from investing in Chinese military technology.

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US introduces regulations to prevent Americans from investing in Chinese military technology.

The Treasury Department released a proposed rule aimed at limiting and monitoring U.S. investments in China for advanced technologies like artificial intelligence, computer chips, and quantum computing. This rule, stemming from President Joe Biden’s August 2023 executive order, is designed to prevent countries of concern, including China, Hong Kong, and Macau, from accessing American funds that could enhance their military and cyber capabilities. The Biden administration’s goal is to curb the development of technologies by China that could potentially give them a military advantage or dominance in key sectors.

The proposed rule specifies the information that U.S. citizens and permanent residents must provide for transactions in these areas, as well as what actions would constitute a violation of the restrictions. It would bar American investors from financing AI systems in China that have military applications such as weapons targeting and combat. Industry experts like J. Philip Ludvigson acknowledge the importance of these details in the outbound investment program, as companies and investors will have to navigate compliance and due diligence requirements when making new investments. Craig Allen, from the U.S.-China Business Council, affirms support for the administration’s efforts to safeguard national security while promoting commercial exchange with China for the benefit of American businesses, workers, and the economy. Treasury is inviting feedback on the proposal until August 4, 2024, with a final rule expected to follow.

Despite tensions between the U.S. and China, Biden administration officials maintain that they are not aiming for a complete “decoupling” from China. Incidents like the shooting down of a suspected Chinese spy balloon by the U.S. military in February 2023 have heightened tensions, leading to confrontations based on national security concerns. Recent actions, such as Biden’s order to block a Chinese-backed cryptocurrency mining firm from owning land near a Wyoming nuclear missile base, reflect the administration’s vigilance in safeguarding national security interests amidst complex geopolitical dynamics.

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