US proposes rules to stop Americans from investing in Chinese technology with military uses
- In Reports
- 09:51 PM, Jun 22, 2024
- Myind Staff
On June 21st, the Treasury Department detailed a proposed rule aimed at restricting and monitoring U.S. investments in China, specifically targeting the fields of artificial intelligence, computer chips, and quantum computing.
This proposed rule originates from President Joe Biden's August 2023 executive order, which addresses the access that “countries of concern” have to American financial resources for funding advanced technologies. The U.S. government argues that such technologies could enhance these countries' military, intelligence, surveillance, and cyber capabilities.
The executive order identified China, Hong Kong, and Macau as countries of concern. The Biden administration aims to hinder the development of technologies in China, the world's second-largest economy, that could provide it with a military advantage or allow it to dominate emerging sectors like electric vehicles.
In addition to the proposed rule, President Joe Biden has imposed a stiff tariff on Chinese electric vehicles (EVs). This move has political implications, as both Biden and Republican Donald Trump aim to demonstrate to voters who can more effectively confront China, a geopolitical rival and major trading partner.
The proposed rule specifies the information that U.S. citizens and permanent residents must provide when engaging in transactions related to artificial intelligence, computer chips, and quantum computing. It also delineates what constitutes a violation of these restrictions.
The proposed rule would specifically prohibit American investors from funding AI systems in China that could be used for military applications such as weapons targeting, combat operations and location tracking, according to a senior Treasury official who previewed the rule for reporters on the condition of anonymity.
J. Philip Ludvigson, a partner at King & Spalding and a former Treasury official for Investment Security, commented that "companies and investors are now getting a much better look at what will be expected of them" under the new outbound investment program. “These added details are particularly important because the private sector will be shouldering the many due diligence and compliance burdens associated with making new investments,” Ludvigson said.
Craig Allen, president of the US-China Business Council, a nonprofit organisation representing American firms that do business in China, stated that his organisation “supports the Biden administration’s efforts to protect US national security while also ensuring robust commercial exchange with China for the benefit of American companies, workers, and our economy.”
The Treasury is seeking comments on the proposal through August 4, 2024, and is expected to issue a final rule afterward. Despite the increased tensions between the two nations in recent years, Biden administration officials, including Treasury Secretary Janet Yellen, have emphasised that they have no intention of “decoupling” from China.
In February 2023, the US military shot down a suspected Chinese spy balloon off the Carolina coast, which had traversed sensitive military areas across North America. This incident led to threats of repercussions from China. Since then, there have been regular incidents between the two nations rooted in national security concerns. For example, in May, President Biden issued an order blocking a Chinese-backed cryptocurrency mining firm from owning land near a Wyoming nuclear missile base, citing its proximity as a "national security risk." These actions underscore the ongoing tensions and security-related confrontations between the United States and China.
Image Source: The Economic Times
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