US Rules on Investments in Artificial Intelligence in China Under Final Review, Expected Soon
The United States is gearing up to implement new rules that will restrict certain US investments in artificial intelligence in China, as part of an effort to prevent American technology from aiding China’s military. These rules, which are currently under final review, will also require US investors to notify the Treasury Department about investments in AI and other sensitive technologies.
The rules, stemming from an executive order signed by President Joe Biden in August 2023, target outbound investment to China in AI, semiconductors, microelectronics, and quantum computing. The Office of Management and Budget is currently reviewing the final rules, indicating that they will likely be released in the coming weeks.
Former Treasury official Laura Black believes that the rules may be published before the upcoming US presidential election on Nov. 5. She also expects the Treasury office overseeing the regulations to provide a 30-day window before the rules go into effect.
The Treasury Department had previously published proposed rules with several exceptions in June, allowing the public to comment. The draft rules placed the responsibility on US individuals and companies to determine which transactions will be restricted.
While a Treasury Department spokesperson declined to comment, Black anticipates that the final rules will provide further clarification on the coverage of artificial intelligence and the threshold for limited partners.
The proposed rules banned transactions in AI for certain uses and involved systems trained using a specified quantity of computing power. They also required notification of transactions related to the development of AI systems or semiconductors not otherwise prohibited. Certain exceptions were proposed for publicly traded securities, limited partnership investments, and syndicated debt financings.
As the US government moves closer to implementing these rules, the tech industry and investors will be closely watching to see how they will impact investments in artificial intelligence and other sensitive technologies in China.
