The US Treasury Department on Monday issued a rule to restrict and monitor American investments in China in sectors like AI, computer chips, and quantum computing, aiming to prevent the Chinese military from advancing in these technologies.

The rule follows an August 2023 executive order by President Joe Biden to limit “countries of concern,” particularly China, Hong Kong, and Macao, from accessing US funds to develop technologies potentially used in areas like code-breaking or next-gen fighter jets. The rule will take effect on January 2.

Paul Rosen, assistant Treasury secretary for investment security, said, “US investments … must not be used to help countries of concern develop their military, intelligence and cyber capabilities.”

He emphasised that investments offer more than capital and that they bring “intangible benefits,” like managerial support, talent acquisition, and access to additional financing.

Blocking China’s high-tech ambitions is one of the few bipartisan issues in Washington. In May, President Biden imposed steep tariffs on Chinese electric vehicles and restricted exports of advanced chips and production equipment to China. Former President Donald Trump has pledged to raise taxes on all Chinese imports if re-elected.

A Chinese Foreign Ministry spokesperson announced Tuesday that China had formally protested the latest US actions.

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