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In a move to safeguard national security, the Biden administration announced on Monday that it is finalizing rules to restrict US investments in specific technology sectors in China, including artificial intelligence (AI), which could support Chinese military or intelligence capabilities. 

These new rules, set to take effect on Jan. 2, 2025, follow an executive order signed by President Joe Biden in August 2023. 

The targeted sectors encompass semiconductors, microelectronics, quantum information technology, and specific AI systems, according to the US Treasury Department as reported by Reuters.

The rules will be enforced by the Treasury’s newly established Office of Global Transactions, with Treasury officials stating that the regulations cover "a narrow set of technologies” deemed essential for advancing next-generation military, surveillance, cybersecurity, and intelligence functions. 

Paul Rosen, a senior official at the Treasury, explained that investments in these areas often extend beyond capital, providing additional resources such as managerial expertise and access to talent networks, which, in this case, could bolster military capabilities in “countries of concern” like China.

Commerce Secretary Gina Raimondo earlier this year emphasized the importance of the restrictions, highlighting the risks of US investments inadvertently aiding the development of Chinese military-related technologies. 

While the rules broadly curb investment in private Chinese tech firms, they allow a carve-out for investments in publicly traded securities. However, officials noted that a previous executive order already restricted US investors from trading securities of certain designated Chinese companies.

The House Select Committee on China has previously criticized major American financial index providers, arguing that billions of US investor dollars have been directed toward Chinese companies allegedly contributing to China's military development.

This latest measure underscores Washington’s commitment to blocking any US-origin technology or expertise that could enhance China’s global tech and defense ambitions.