President Joe Biden on Wednesday will establish new rules limiting American investments in high-end Chinese technology sectors — a long-awaited effort meant to stop U.S. capital from financing Beijing’s military development.
The move represents the first time the U.S. government has sought to impose broad investment rules on U.S. firms overseas — an escalation of the economic conflict with China that is likely to earn a sharp rebuke from Beijing. Until now, U.S. firms have largely been given free rein by Washington to develop business in other countries, except for limitations on a narrow list of military-related goods. But national security officials in both the Trump and Biden administrations have warned that U.S. investors have been financing Beijing’s military advancements by funding Chinese firms that turn around and give their technology to China’s military.
The executive order, which will be implemented by the Treasury Department, will prohibit some investments in Chinese firms engaged in developing quantum computing sensors and networks, as well as advanced semiconductor firms, and certain artificial intelligence firms. It will also require U.S. firms to notify the federal government if they invest in some lower-end semiconductor production not already covered by export controls, said a group of senior administration officials, who requested anonymity to brief reporters on Wednesday afternoon.