The Biden administration has taken decisive steps to prevent Americans from investing in advanced technology, including artificial intelligence (AI), being developed in China. The U.S. Treasury Department finalized a rule on Monday, in line with President Biden’s August 2023 executive order, aimed at restricting access to American investments in developing technologies by “countries of concern,” specifically China, Hong Kong, and Macao. The rule, effective from January 2, focuses on three core tech areas: semiconductors and microelectronics, quantum information technologies, and certain AI systems.
The U.S. Treasury Department justified the rule as a measure to safeguard national security, highlighting that these technologies are crucial for the next generation of military, cybersecurity, surveillance, and intelligence applications. Assistant Treasury Secretary for Investment Security, Paul Rosen, emphasized that American investments should not contribute to the development of military, intelligence, and cyber capabilities of countries of concern.
The primary objective of these measures is to prevent the Chinese military from gaining access to cutting-edge technology. However, there may be potential consequences for U.S. tech companies and venture capitalists, as these restrictions could limit their market opportunities. Phil Siegel, founder of the AI nonprofit Center for Advanced Preparedness and Threat Response Simulation (CAPTRS), believes that until the potential risks posed by this technology are fully understood, it is prudent to proceed cautiously. He suggests that slowing down China’s progress in these technologies may outweigh the benefits of closely monitoring their application.
Siegel also points out that these restrictions could result in a loss of visibility into China’s AI advancements for the United States. China has strongly condemned the U.S.’s efforts to counter its AI development and lodged a protest with Washington. Foreign Ministry spokesperson Lin Jian expressed China’s firm opposition to the U.S. rolling out investment restrictions.