The Biden administration has recently set some pretty major limits on American investments in advanced technologies in China, a move aimed at safeguarding our national security and tech innovation.

Starting January 2, 2024, a new Treasury Department rule will restrict American investment in three tech areas—semiconductors, quantum information, and artificial intelligence (AI)—specifically targeting advancements that could aid China’s military and intelligence capabilities.

This policy follows an executive order President Joe Biden issued back in August 2023, and it’s sparking a lot of discussion about the future of American investments in global tech. Here’s a more in-depth look at the recent ruling.

Why Block Investments in Chinese Tech?

At the heart of these measures is America’s concern over certain “countries of concern,” a list that currently zeroes in on China (along with Hong Kong and Macao).

The Treasury Department, in an October 28 release, considers these emerging technologies essential to future military and cybersecurity applications.

In simple terms, Washington wants to avoid a scenario where US-developed technology is powering adversarial capabilities in surveillance, military operations, or cyber warfare.

Paul Rosen, assistant secretary for investment security, put it plainly: the US doesn’t want American investments helping China develop advanced military or intelligence tools. With advancements like quantum computing and AI progressing rapidly, the stakes are high.

“US investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence, and cyber capabilities,” Rosen explained.