US proposes targeted restrictions for AI, tech investment in China

By Andrea Shalal, David Lawder and Karen Freifeld

WASHINGTON/NEW YORK(Reuters) – The United States on Friday issued what it described as targeted draft rules to ban or require notification of U.S. investments in artificial intelligence and other key technology sectors in China that could threaten U.S. national security.

The U.S. Treasury Department published the proposed rules and a raft of exceptions after an initial comment period following an executive order signed by President Joe Biden last August. The rules put the onus on U.S. individuals and companies to determine which transactions will be restricted or banned.

Public comments will be accepted until Aug. 4, which means the U.S. is on track to implement regulations by the end of the year as anticipated.

Biden’s executive order, which directed regulation of certain U.S. investments in semiconductors and microelectronics, quantum computing and artificial intelligence, reflects growing frustration with China’s aggressive efforts to dominate global markets, especially in emerging technologies.

“This proposed rule advances our national security by preventing the many benefits certain U.S. investments provide —beyond just capital — from supporting the development of sensitive technologies in countries that may use them to threaten our national security,” said Treasury Assistant Secretary for Investment Security Paul Rosen.

(Reporting by Andrea Shalal and David Lawder in Washington and Karen Freifeld in New York; editing by Chris Sanders and Chizu Nomiyama)