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This move follows an executive order from President Biden in August 2023 and is part of a broader US strategy to protect national security.

The US government is setting new rules to limit investments in Chinese technology sectors, focusing on areas with potential military use, like artificial intelligence (AI), microelectronics, and quantum technology. These restrictions, effective January 2, aim to prevent American investments from helping China develop advanced technology for military purposes.

Focus on National Security and Technology

According to Reuters, this move follows an executive order from President Biden in August 2023 and is part of a broader US strategy to protect national security. The Treasury Department has led this effort, creating the new Office of Global Transactions to oversee and enforce the rules. 

The goal is to keep certain high-level technologies—like those related to cybersecurity, military intelligence, and next-gen computing—out of reach for military applications that could pose risks to the US.

According to senior Treasury official Paul Rosen, these restrictions aren’t just about stopping the flow of American money. US investments also bring valuable expertise, connections, and access to talent, which can be critical in advancing military technologies. Limiting these intangible resources from reaching certain tech sectors in China is essential to maintaining a safe balance in global technology competition.

Key Technology Areas Affected

Key technology areas covered by the new rules include advanced computer systems and equipment for military aviation. However, there are exceptions for publicly traded securities, allowing American investors to hold shares in some Chinese companies. Still, the rules build on existing restrictions, especially for firms with known ties to military tech.

Commerce Secretary Gina Raimondo emphasized that these rules are essential to stopping the development of tech that could help build a stronger Chinese military. Limiting how much US know-how and funding flows into these fields is a proactive measure to maintain a competitive advantage in crucial areas of technology and security.

The House Select Committee on China has also expressed concern over major US financial groups investing heavily in Chinese firms linked to military advancements. By targeting specific high-stakes sectors, the US aims to reduce its involvement in foreign developments that could pose future security threats.

With these measures, the US is making it clear that technology and security go hand in hand, especially in areas where advancements can shift global power. The new rules underscore a commitment to safeguarding American interests amid the rapid growth of technology across the globe.