US rules that will restrict certain investments in artificial intelligence (AI) in China are now under final review, according to a government posting, signalling that the restrictions will be implemented soon. 

These rules, which will also require US investors to notify the Treasury Department about some investments in AI and other sensitive technologies, are part of an executive order signed by President Joe Biden in August 2023. The aim is to prevent American expertise from supporting China’s military advancements.

The final rules, which target outbound investments in China related to AI, semiconductors, microelectronics, and quantum computing, are currently being reviewed by the Office of Management and Budget. This stage of review typically indicates that the rules will likely be released within the next week or so.

In reference to the US presidential election on 5 November, former Treasury official Laura Black, a lawyer at Akin Gump in Washington, stated, “It looks to me like they’re trying to publish this before the election.” According to Black, the Treasury office in charge of the regulations usually gives at least 30 days’ notice before they take effect.

In June, the Treasury Department solicited public feedback on proposed rules that included several exemptions. The draft regulations will allow US people and businesses to choose which transactions will be prohibited. 

A representative for the Treasury Department chose not to comment.

Black expects the final regulations to provide additional clarification on the limited partner’s criterion and the scope of artificial intelligence coverage. Transactions using AI for specific goals and systems trained to consume a certain amount of processing power were forbidden under the proposed restrictions.

Reports were required for transactions involving the development of semiconductors or artificial intelligence systems that were not otherwise prohibited.

The suggested exceptions included some limited partnership investments, publicly traded securities like mutual funds or index funds, and specific syndicated debt financings.

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