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US finalizes rules to curb AI investment in China – National

The Biden administration said on Monday it was finalizing legislation that would limit US investment in artificial intelligence and other technology sectors in China that could threaten US national security.

These rules, proposed in June by the US Treasury Department, were directed by an executive order signed by President Joe Biden in August 2023 that includes three key sectors: semiconductors and microelectronics, quantum information technology and certain AI systems.

The new rules take effect on Jan. 2 and will be overseen by the Treasury's newly created Office of Global Affairs.

Treasury said “microtechnology is at the core of the next generation of military, cybersecurity, surveillance, and intelligence applications.”

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The legislation includes technologies such as “code-breaking computer systems or next-generation fighter jets,” added Paul Rosen, a senior Treasury official.

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He added that “US investment, including intangible benefits such as administrative assistance and access to investment and talent networks that often accompany such financial flows, should not be used to help the countries concerned develop their military, intelligence and cyber capabilities.”

The law is part of a broader plan to block US information from helping the Chinese develop sophisticated technology and dominate global markets.

Commerce Secretary Gina Raimondo said earlier this year that the rules are important to prevent the development of military-related technology in China.

The new rules contain a carve out that allows US investment in publicly traded securities, but officials said the US already has jurisdiction under a previous regulatory order that prohibits buying and selling securities of certain designated Chinese companies.

The House select committee on China has criticized major American suppliers for directing billions of dollars from American investors to the stocks of Chinese companies that the US believes are helping China's military development.

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Reporting by David Shepardson, Michael Martina and Trevor Hunnicutt; Edited by Lisa Shumaker





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