The U.S. is set to implement new restrictions on investments in artificial intelligence (AI) in China, with final rules currently under review by the Office of Management and Budget, signaling an imminent release. These regulations follow an executive order from President Joe Biden in August 2023, aimed at preventing U.S. expertise from advancing China’s military capabilities.
The upcoming rules will ban certain outbound investments from the U.S. to China in key technological areas like AI, semiconductors, microelectronics, and quantum computing. In addition to prohibiting specific investments, U.S. investors will be required to notify the Treasury Department about some AI-related transactions. The Treasury Department’s draft proposal, released in June, outlined exceptions and provided a window for public feedback. Former Treasury official Laura Black, now with Akin Gump, anticipates that the final rules will be released before the November 5, 2024, U.S. presidential election and will offer more clarity on the scope of restricted AI activities.
While the exact details of the final regulations remain under review, it is expected that the final rules will focus on the use and development of AI systems, including those requiring significant computing power. Certain investment vehicles, like publicly traded securities and limited partnership investments, are among the proposed exceptions.
The Treasury Department has not commented on when the rules will officially take effect, but Black suggests there will be at least a 30-day window before they are enforced. The upcoming measures aim to limit China’s access to advanced technologies while still allowing for controlled investment avenues.
Featured image courtesy of TeachOnline.CA
Follow us for more updates on China’s AI investments.