The Treasury Department finally clarified a proposed rule which would limit and watch the investments of the US in China in AI, quantum computing and computer chips. The proposed rule came as a result of President Joe Biden’s August 2023 executive order concerning the access to advanced technologies funded by American dollars for “countries of concern” that according to the US government will enhance their military, intelligence, surveillance and cyber capabilities. As such, it identifies China, Hong Kong and Macau as countries of concern.
The second largest economy globally – China, led by Joe Biden has obstructed development of technology that could give it superiority in terms of defense or even dominance over emerging sectors such as electric vehicles.
A stiff tarrif on Chinese EVs is also another action taken by Democrat Biden besides proposing this rule, an issue with political implications as Republican Donald Trump; both presidents vying to show voters who can best stand up against china.
The requirements for US citizens and green card holders when engaging in transactions under this area is outlined in the proposed rule alongside what would be considered as a violation of restrictions.
However, these details were given anonymously by a senior Treasury official who spoke to journalists on condition of non-attribution such that it would stop Americans from financing any AI systems that might have military applications including targeting sites for weapons or fighting or guiding troops among other things.
“We are now getting much better look at what companies and investors will need to do under this new outbound investment program,” said J Philip Ludvigson who serves as a former Treasury official for Investment Security currently working at King & Spalding. “Because the private sector will face substantial due diligence and compliance burdens associated with making new investments”, he added.
Craig Allen, president of the nonprofit organization U.S.-China Business Council says his group supports “the Biden administration’s efforts to safeguard US national security while promoting robust commercial exchanges between America and China that benefit American firms.”
Treasury is soliciting comments on the proposal until August 4, 2024 and then it will issue a final rule.
“I don’t think there’s any reason to have a decoupling with China,” including Treasury Secretary Janet Yellen and other Biden administration officials, have said. But the two countries have had increased tensions in recent years.
In response, China warned of possible consequences after a suspected Chinese spy balloon was downed by US military in February 2023 having crossed sensitized military areas across North America’s Carolina coastline.
Subsequent to that, national security driven incidents between the two nations have been frequent.
For example, Biden in May signed an order blocking land near a Wyoming nuclear missile base from being owned by a Chinese-backed cryptocurrency mining company because of its “national security risk”.
