(Bloomberg) — The Biden administration has laid out plans to restrict investment by U.S. individuals and companies in China, with a focus on curbing Beijing’s ability to gain ground in semiconductors, quantum computing and artificial intelligence.
Bloomberg’s Most Read
The Treasury Department said Friday that the new rules it proposes would restrict foreign investment in technologies critical to “the next generation of military, intelligence, surveillance, or cyber capabilities that pose national security risks to the United States.”
The restrictions, which have been in place for more than a year, are part of President Joe Biden’s strategy to slow Beijing’s rush to develop sensitive technologies that threaten U.S. national security.
US Treasury Secretary Janet Yellen said almost a year ago that planned controls on overseas investment would be narrowly focused and would be a complement to existing export controls. These restrictions, announced in October 2022, marked an escalation in Washington’s technological battle with Beijing, blocking the sale of advanced semiconductors, as well as the technology and knowledge to manufacture them.
Treasury laid out the details Friday in a so-called Notice of Proposed Rulemaking, one of several bureaucratic steps initiated by an executive order issued last August. The department did not give a deadline for releasing the final rules or when they would take effect.
The more detailed proposal makes it clear that Washington is paying increasing attention to artificial intelligence. In a conference call with reporters on Friday, a senior Treasury official said the administration wants to prevent China from developing AI applications that, among other things, could be used for targeting weapons in combat or for mass surveillance such as tracking. of location.
The Treasury will accept public comments on the proposals until August 4. Details include:
-
What types of investments would this apply to? The affected transactions would include equity acquisitions, debt-to-equity financing, greenfield investments, joint ventures and certain investments as a limited partner in a joint investment fund outside the US.
-
Which sectors are affected? The rules would prohibit or require notification about certain transactions related to:
-
Semiconductors and microelectronics
-
Quantum information technologies
-
Artificial intelligence systems
-
The proposal offers “alternatives to the prohibition of covered transactions related to the development of any AI system that is trained using a specific amount of computing power and trained using a specific amount of computing power using primarily biological sequence data.”
-
-
-
What are the penalties for violations? The Treasury can impose civil sanctions against individuals and companies that have committed violations and can refer cases to the Public Prosecutor’s Office for criminal prosecution.
-
Are there exceptions? The Treasury proposed that some transactions be exempt, including in publicly traded companies, investments in funds of “a certain size” and outright property acquisitions, among others.
Separately, a bipartisan legislative effort to restrict overseas investment failed late last year. Top Republicans in Congress disagreed over whether to codify the administration’s sectoral approach or rely on individual sanctions for companies. House Speaker Mike Johnson has convened a working group on the issue, with the goal of reaching a consensus by the end of March. They have not yet released a new bill.
Bloomberg Businessweek Most Read
©2024 Bloomberg LP
