US Restricts Investment in Chinese AI, Other Technologies

U.S. President Joe Biden signed an executive order Wednesday limiting investment in Chinese companies that develop advanced technologies including artificial intelligence, characterizing the restrictions as a national security imperative.

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The order says it aims to deny dollars, American managerial know-how and access to talent and international markets to companies whose technological advances ultimately assist militaries that pose a risk to U.S. interests. The order will come into effect after the completion of a rule-setting process conducted by the Department of the Treasury.

The administration’s intent is to “prevent the People’s Republic of China from obtaining and using the most advanced technologies to promote military modernization and undermining U.S. national security,” said a senior administration official speaking to reporters Wednesday afternoon.

Besides artificial intelligence systems that could aid in military objectives such as breaking cryptographic codes, the order restricts investments in semiconductors and microelectronics and quantum information technologies. The rule-making process led by the Treasury Department will define two categories of investments: investments that require disclosure to the federal government and prohibited investments.

A second senior official told reporters that the order’s most important effect will be limiting China’s access to technical innovations rather than investment dollars. “China doesn’t need our money; they’re a net capital exporter,” the official said.

The order is the latest in a series of national security barriers the U.S. government has mounted against Chinese access to American markets and investment even as the Biden administration has sought to ensure that most trade continues uninterrupted.

White House national security adviser Jake Sullivan in April said the White House was constructing “tailored measures” aimed at sensitive technologies. “They are not, as Beijing says, a ‘technology blockade,'” he said.