By David Shepardson, Michael Martina and Trevor Hunnicutt

WASHINGTON (Reuters) – The Biden administration said on Monday it was finalizing rules that would limit U.S. investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security.

The rules, proposed in June by the U.S. Treasury, were governed by an executive order signed by President Joe Biden in August 2023 covering three key sectors: semiconductors and microelectronics, quantum information technology, and certain computer systems. AI.

The new rules take effect on January 2 and will be overseen by Treasury’s new Office of Global Transactions.

The Treasury said the “restricted set of technologies are at the heart of the next generation of military, cybersecurity, surveillance and intelligence applications.”

The rule covers technologies such as “advanced computer systems for code-breaking or next-generation fighter jets,” added Paul Rosen, a senior Treasury official.

He added that “US investments, including intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, should not be used to help countries of concern to develop their military, intelligence and cyber capabilities.

The rule is part of a broader campaign to prevent American know-how from helping the Chinese develop sophisticated technologies and dominate global markets.

Commerce Secretary Gina Raimondo said earlier this year that these rules were crucial to preventing China from developing military technologies.

The new rules contain an exclusion allowing U.S. investments in publicly traded securities, but officials said the U.S. already has powers under a previous executive order prohibiting the buying and selling of securities of certain companies designated Chinese.

The House Select Committee on China criticized major U.S. index providers for steering billions of dollars from U.S. investors into shares of Chinese companies that the U.S. says facilitate military development Chinese.

(Reporting by David Shepardson, Michael Martina and Trevor Hunnicutt; editing by Lisa Shumaker)