Biden Administration Issues New Regulations Restricting Investment in AI and Other Fields in China

In the early morning of yesterday, the U.S. Department of the Treasury released a 12-page draft of regulations aimed at strengthening investment oversight in key technology sectors such as semiconductors, microelectronics, quantum computing, and artificial intelligence (AI), particularly limiting or prohibiting Chinese investments in these areas. This move signifies the Biden administration's further tightening of its technology investment policy towards China. According to an official statement from the U.S. Department of the Treasury, the new regulations are a "narrowly tailored, targeted national security plan" that focuses on foreign investments that pose potential threats to U.S. national security. Paul Rosen, Assistant Secretary for Investment Security at the Treasury Department, stated that the regulations aim to prevent U.S. investments from being used to support the development of sensitive technologies that may threaten U.S. national security. The draft regulations announced this time are based on an executive order signed by President Biden in October last year, which aims to restrict investments and protect the development of AI in the United States. The Biden administration has consistently regarded AI as a critical area for national security and economic development, and is committed to ensuring U.S. leadership in this field. The new regulations require U.S. individuals and companies to independently determine which transactions to restrict or prohibit, including prohibiting AI technology transactions for certain end uses and transactions involving systems trained with specific computational capabilities. At the same time, the regulations also provide a series of exceptions, such as publicly traded securities and certain limited partnership investments. It is worth noting that the new regulations also point out that if certain transactions with third countries are determined to contribute to addressing national security concerns or if the third country has adequately addressed national security concerns, they may be exempted. In addition, although the executive order currently focuses primarily on China (including ## and ##), U.S. officials have stated that the scope of restrictions may be expanded in the future. The U.S. Department of the Treasury stated that it has engaged with U.S. allies and partners regarding the objectives of investment restrictions, and noted that the European Commission and the United Kingdom have begun considering whether and how to address foreign investment risks. Furthermore, the Treasury Department emphasized that the regulations aim to protect U.S. national security, rather than targeting specific countries. However, this new regulation has attracted widespread attention from the international community. The spokesperson for the Chinese Ministry of Foreign Affairs previously expressed strong dissatisfaction and firm opposition to the U.S. measures to impose investment restrictions on China, and has made solemn representations to the U.S. side. The Ministry of Foreign Affairs emphasized that the U.S. move seriously violates the principles of a market economy and fair competition, and seriously disrupts the international economic and trade order. China will closely monitor relevant developments and resolutely safeguard its own interests. The deadline for public comments on the proposed regulations is August 4th, and it is expected that the related regulations will be implemented by the end of this year. The implementation of this new regulation will have far-reaching implications for the technology industries of both China and the United States, as well as global technological development and international cooperation. It has sparked concerns from various sectors about the future of technology development and international cooperation.