President Joe Biden’s administration plans to detail new rules Wednesday limiting US investments in advanced technology industries in China, according to people familiar with the plans, in an effort to protect national security at a moment of heightened tension with Beijing.
The new rules are expected to place restrictions on investments by US private equity and venture capital firms, as well as joint ventures, in Chinese artificial intelligence, quantum computing and semiconductors. The rules will be subject to a public comment period.
The New York Times was first to report on the new rules.
Long in the works, the new restrictions are meant to prevent American knowledge and money from flowing to China and to tighten the amount of cutting-edge technology available to the Chinese military.
US Treasury Secretary Janet Yellen discussed the rules, which aim to delay China’s technological and military advancement, in meetings with Chinese counterparts in early July.
Yellen, along with other top administration officials, have described the rules as limited in scope, intended not to damage China’s economy but instead to protect American national security.
“You don’t want the cutline to be so broad that you deny American companies revenue and China can get the products elsewhere, or China gets products from other countries, so what we’re trying to do is be narrowly defined [and] work with our allies on these chokepoint technologies,” Commerce Secretary Gina Raimondo said this summer at a forum.
US national security adviser Jake Sullivan described the measures as “tailored” in April.
“They are not, as Beijing says, a ‘technology blockade’,” he said.
The rules would also allow for greater government visibility into US investments in China by requiring companies to report their activity.
The White House did not comment Wednesday about the pending rules.
The United States and China are in the midst of tit-for-tat export restrictions involving high-tech products, following escalating concerns in Washington about the risk posed by Beijing to its national security.
Last October, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license.
China has complained bitterly about the rules, accusing the US of attempting to slow its economic growth. Chinese President Xi Jinping raised the issue of the chip restrictions in a conversation with Biden last year.
Still, Biden and his team have encouraged other countries to take similar steps to “de-risk” national security supply chains from China. The effort has gained traction in Europe.
At the same time, Biden has sought to stabilize the US-China relationship, including developing more robust communication mechanisms and sending top administration officials to China for talks. Aides have not ruled out a meeting between Biden and Xi on the sidelines of upcoming leaders summits.