The United States has expanded its restrictions on investments tied to certain Chinese technologies, including semiconductors, quantum computing, and artificial intelligence. As of January 2, investments in China, Macau, and Hong Kong will require notification to the US Treasury if they could pose a national security risk.

Initially proposed in mid-2023, the rules are designed to prevent tangible and intangible benefits from reaching Chinese hands that could exploit advanced tech for military enhancements.

According to Paul Rosen, Assistant Secretary for Investment Security, these technologies are essential for the latest military innovations, such as next-gen fighter jets and surveillance systems. The US doesn’t intend for its investments to contribute to adversaries’ advancements.

Apart from direct cash flow, investment ties might provide Chinese entities with access to managerial expertise and networks. This could indirectly support China’s defense developments.

The restricted installations include specific software and hardware associated with semiconductor manufacturing and advanced AI operations. For AI, projects with computational prowess exceeding a certain threshold require government reporting.

The regulations have faced varied feedback from stakeholders, primarily over the extensive scope impacting any AI-related transactions linked to potential military use. However, the government clarifies that only significant AI system adjustments fall under these laws. Public securities and some existing Chinese ventures remain exempt, but violations risk fines up to double the transaction’s value.