The United States has finalized regulations limiting investment in key technology sectors in China, including artificial intelligence and semiconductors, over national security concerns. The Treasury Department’s announcement, reported by Reuters, underscores a significant shift in the U.S. approach to foreign investment in critical technologies.

Starting January 2, U.S. citizens, permanent residents, and U.S.-based companies will be prohibited from engaging in transactions involving advanced technologies such as AI, quantum computing, and semiconductors . Additionally, U.S. investors will be required to notify the Treasury of investments in less advanced technologies that could still pose national security risks.

Paul Rosen, Assistant Secretary of the Treasury for Investment Security, emphasized the importance of these measures, saying: “American investments should not be leveraged to advance the development of key technologies that could threaten our national security.”

He stressed that U.S. investments often include intangible benefits like managerial expertise and access to talent networks, which are unlikely to help countries perceived as adversaries strengthen their military, intelligence or cyber capabilities.

The restrictions follow President Joe Biden’s executive order last year, which aimed to curb investments in semiconductors, microelectronics, quantum computing and some AI technologies. Biden has expressed concerns that U.S. investments could inadvertently support adversary countries in developing sensitive technologies critical to military and intelligence operations.

In response, China’s Foreign Ministry condemned the decree, calling it an anti-globalization and de-Initization effort. The ministry expressed strong dissatisfaction and strongly opposed the US position, saying that China had filed official complaints regarding investment restrictions.

The U.S. government’s decision reflects growing apprehension about China’s technological advancements and their potential military applications. By limiting investment in critical sectors, the United States aims to safeguard its national interests and prevent adversaries from gaining the upper hand in emerging technologies vital to national security.

As the geopolitical landscape continues to evolve, these new investment restrictions mark an important step in the ongoing tension between the United States and China. The implications of these regulations will likely ripple throughout the global technology industry, affecting not only U.S. investors but also foreign companies operating in similar sectors. The push for a more cautious approach to technology transfer highlights the growing priority given to national security in economic policy.