The U.S. government will ban Chinese investment in developing artificial intelligence (AI) systems of its capital from next year.
The U.S. Treasury Department announced on Monday (local time) the “final rule for the enforcement of an executive order regarding U.S. investment in certain national security technologies and products within a country of concern.” The rule will take effect on January 2 next year.
The “country of concern” was defined as China, Hong Kong, and Macau. In fact, the main point of the rule is the complete control of US capital’s investment in cutting-edge technology. Areas to be controlled include semiconductors, quantum computing, and AI. US companies that want to make public investments in the field must report their investment plans in advance, and US Treasury Secretary Janet Yellen has the regulatory authority.
The final rule announced this time was drawn after collecting opinions on Executive Order 14105 signed by President Joe Biden in August last year and agreeing between ministries. The White House explained, “As specified in the executive order of the Presidential Decree, the final rule prohibits Americans from engaging in certain transactions related to certain technologies and products that pose a serious national security threat to the United States.”
The purpose of the control is to block China from strengthening its military capabilities using the technology. The White House pointed out that countries of concern are exploiting certain U.S. foreign investments in a way that accelerates the development of sensitive technologies and products that undermine U.S. national security interests. The Biden-Harris administration is doing its best to protect the safety of the U.S. by preventing the countries of concern, namely China, from developing key technologies that are important for military modernization.
“AI, semiconductor and quantum technologies are fundamental to the development of next-generation military, surveillance, information, and specific cybersecurity applications, such as cutting-edge decryption computer systems or next-generation fighter jets,” said Paul Rosen, assistant secretary of investment security at the Ministry of Finance.
Specifically, in the semiconductor field, specific electronic design automation software, specific manufacturing or advanced packaging tools, design or manufacture specific advanced integrated circuits, advanced packaging technology for integrated circuits, and transactions related to supercomputers are prohibited. In the case of integrated circuit design and manufacturing or packaging-related transactions, reporting obligations are imposed.
In the field of quantum computing, transactions related to the production of key components required for development or production, the development or production of specific quantum sensing platforms, and the development or production of specific quantum networks or quantum communication systems are prohibited.
In the field of AI, all AI system development-related transactions designed or intended for specific end-use are prohibited.
For example, US investment companies are prohibited from acquiring a stake in a high-tech semiconductor manufacturer in China or purchasing Chinese land to establish a quantum computing research facility. If you have secured a stake in a Chinese company that produces non-advanced commercial semiconductors, you must report it to the Treasury Department.
Violations of the rules could result in civil and criminal penalties under the International Emergency Economic Powers Act (IEEPA), the Treasury Department explained.
SOPHIA KIM
US ASIA JOURNAL
