U.S. Proposes Rules to Limit Investments in Chinese Military Technology
New Rules Focus on China, Hong Kong, and Macau
The U.S. government is proposing new rules to stop Americans from investing in advanced Chinese technologies that could be used for military purposes. These new measures target China, Hong Kong, and Macau.
Details of the Proposed Rule
The Treasury Department described the proposed rule on Friday. It places restrictions on U.S. investments in China for technologies like artificial intelligence (AI), computer chips, and quantum computing. This rule follows President Joe Biden's August 2023 executive order aimed at limiting access for these "countries of concern" to American dollars. The U.S. believes this move will prevent these countries from enhancing their military, intelligence, surveillance, and cyber capabilities.
Why the Rules are Being Enforced
The Biden administration is attempting to slow down China’s development in areas that could give it a military advantage or make it dominate new markets such as electric vehicles (EVs). President Biden has also imposed a high tariff on Chinese EVs. This is part of a broader political strategy as he and Republican contender Donald Trump both aim to show voters their ability to confront China, seen as a geopolitical rival and major trading partner.
What Americans Need to Know
The proposed rule specifies the type of information U.S. citizens and permanent residents must provide when taking part in these transactions. It also outlines what would be considered violations of these restrictions. Specifically, American investors would be prohibited from funding AI systems in China that could be used for weapons targeting, combat operations, and location tracking, among other military uses.
Public Input and Future Steps
The Treasury is open to comments on the proposal until August 4, 2024. After this period, a final rule is expected to be issued.
Rising U.S.-China Tensions
Despite efforts to avoid completely cutting ties with China, tensions have been on the rise. In February 2023, a suspected Chinese spy balloon was shot down by the U.S. military after it flew over sensitive military areas. This move led to threats of retaliation from China.
In May, President Biden issued another order blocking a Chinese-backed cryptocurrency mining firm from owning land near a Wyoming nuclear missile base, citing it as a national security risk.
By focusing on these new rules, the U.S. aims to protect its national security while carefully navigating its complex relationship with China.
