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According to a draft rule, US investors cannot fund AI systems in China that could be used for military purposes, including weapons targeting.
The US Treasury has proposed a law to prohibit and oversee US investments in China for AI, computer chips, and quantum computing.
The Friday draft rule follows President Joe Biden’s August executive order granting “countries of concern” access to American cash to buy innovative technology that could improve their military, intelligence, surveillance, and cyber capabilities. China, Hong Kong, and Macau were on the list.
The Biden administration has tried to stop China, the world’s second-largest economy, from developing technology that could give it a military advantage or allow it to dominate burgeoning areas like electric automobiles.
Biden, a Democrat, has also placed a high tariff on Chinese EVs, a political issue as he and his Republican presidential opponent Donald Trump try to show voters who can best stand up to China, a geopolitical rival and major trading partner.
The proposed regulation specifies what information US citizens and permanent residents must submit when transacting in this area and what constitutes a violation.
A senior Treasury official who previewed the regulation for reporters on condition of anonymity said it would bar American investors from backing Chinese AI systems for weapons targeting, battle, and location tracking, among other military applications.
Through August 4, the US Treasury is accepting comments on the plan before issuing a final rule.
Biden administration officials, including Treasury Secretary Janet Yellen, have denied “decoupling” from China, although tensions have grown in recent years.
After a suspected Chinese surveillance balloon crossed sensitive areas off the US East Coast in February 2023, the US military shot it down.
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