Washington Bans American Companies from Investing in Chinese AI

The United States has imposed a ban on forign investments by American companies in advanced technology fields, particularly artificial intelligence and quantum computing, in “problematic countries,” with China at the forefront, according to a statement from the Treasury Department.

According to the department, this decision stems from a decree issued by President Joe Biden and aims to “defend U.S. national security by protecting sensitive technologies for the new generation of military innovations”.

On the other hand, the department emphasized the “extremely limited” nature of the decree, in order to “maintain foreign investments” for American companies.

The new rules require American companies and individuals to report specific transactions to the administration, while explicitly prohibiting other transactions if they involve “entities related to the advanced technologies mentioned in the decree.”

An official in the U.S. administration explained that “China seeks to possess and produce essential technologies that can help modernize its military.”

He added that this decree “specifically aims to limit American investments in companies involved in this effort.”

The Biden administration fears that China could benefit from American investments not only in terms of technology transfer but also through “intangible benefits,” such as collaboration in establishing production lines, knowledge exchange, and access to markets.

This decision marks the first wide-range government intervention to restrict the activities of American companies abroad. In contrast, China expressed its significant concern about the matter and stated that it reserves the right to take any actions it deems necessary.

The Chinese Ministry of Commerce said in a statement that the matter affects the operations and decision-making processes of companies and undermines the international economic and trade system.

The United States previously allowed the private sector unrestricted commercial transactions in any country and across multiple fields, with the exception of a narrow list of goods and components related to military equipment.

Officials in both the Trump and Biden administrations have warned that American companies unintentionally contribute to China’s military advancement by dealing with companies that share American technology with the Chinese army.

White House officials explained that the U.S. Treasury Department will oversee the implementation of the executive order by banning investment in Chinese companies operating in sectors related to artificial intelligence and the production of advanced semiconductors.

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