The Biden-Harris administration finalized a rule Monday that prohibits Americans from participating in transactions that could bolster China’s development of advanced technologies, especially ones that would bolster Beijing’s military.
The Treasury Department regulations implement an executive order that President Biden signed in late 2023 to clamp down on “countries of concern” who threaten U.S. national security.
Senior administration officials said the rule prohibits U.S. persons from engaging in transactions that would help these nations in three sectors: semiconductors and microelectronics; quantum information technologies; and artificial intelligence.
China has a stated goal of developing sensitive technologies that would directly support its military, according to the officials.
“Cross-border investment flows and the United States’ open investment policy contribute to our economic vitality,” the White House said in a fact sheet. “Countries of concern, however, are exploiting certain U.S. outbound investments in ways that threaten to accelerate the development of sensitive technologies and products that undermine our national security interests.”
The rule also requires U.S. persons to notify the Treasury Department of transactions involving technologies that could threaten national security.
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The final rule will take effect in January to give companies and investors time to digest the new rules.
Beijing is viewed as a top U.S. rival in the development of sensitive technologies. The Chinese communist government has been increasingly aggressive in the South China Sea, stoking fears that it might invade Taiwan.
The Trump and Biden administrations took a hard look at China-linked technologies, including Huawei products and the TikTok social media app.
The Biden-Harris administration also proposed a prohibition on the sale or import of “smart” cars that have certain technology from China or Russia, citing national security concerns.
U.S. rules already ban the direct export of certain technologies to countries of concern.
The rule announced Monday is designed to complement those export controls by clamping down on capital and “the intangibles that can flow” from those investments to China.
For instance, transactions that purchase land for quantum computing facilities could run afoul of the rule. The Treasury says some limited investments may be exempt from the rule.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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