President Joe Biden is about to unveil investment rules limiting American investments in advanced Chinese tech sectors.

In an unprecedented step, President Joe Biden is poised to introduce a set of investment rules aimed at curbing American investments in targeted advanced Chinese technology sectors.

According to an article published by Medium, President Joe Biden is gearing up to reveal new investment rules that seek to put a cap on American investments in detailed, cutting-edge Chinese technology fields. These regulations have been drafted with the purpose of containing U.S. investments from inadvertently fueling China’s military improvements.

This marks the very first time that the U.S. government is laying down comprehensive investment rules for American companies that are operating internationally.

While American businesses have generally been given the green light by Washington to conduct operations overseas, there’s been a growing worry that such investments might indirectly contribute to China’s military progress by supporting Chinese companies that collaborate with the military.

The upcoming executive order, set to be executed by the Treasury Department, will put into effect particular investment rules, disallowing certain investments in Chinese enterprises that are driving forward quantum computing sensors and networks, sophisticated semiconductor businesses, and designated artificial intelligence companies.

Furthermore, it will require U.S. companies to provide reports to the federal government about investments in less advanced semiconductor production that don’t currently fall under export controls.

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The main goal of these investment rules is to pinpoint investments that directly play a role in bolstering China’s military capabilities.

According to an article published by Politico, it’s important to note that these investment rules will only impact new investments, not those that already exist, and they’re expected to kick in next year following a period for industry comments. Interestingly, “passive investments,” such as those made by U.S.-based pension funds in Chinese securities, won’t face any restrictions.

The administration is also contemplating the possibility of excluding investments in publicly traded securities from these investment rules, reasoning that these investments typically don’t result in the type of technology sharing that benefits China’s military.

This move comes ahead of Commerce Secretary Gina Raimondo’s planned trip to China and comes in the wake of ongoing efforts to mend relations between the two countries. Prior to this, Treasury Secretary Janet Yellen had visited Beijing to discuss the administration’s plans regarding investment rules.

Although the executive order takes a more assertive stance than initially anticipated, it does leave out certain sectors like biotech and clean energy. The Biden administration has been encouraging other nations to adopt investment rules that resemble those imposed on Chinese tech sectors.

Members of Congress have also been debating similar measures, with the Senate incorporating a provision into the defense authorization bill, while the House pursues its own approach to expanding existing corporate blacklists.

In spite of some criticism for not going further, the Biden administration’s order places it in a more vigilant position than certain congressional endeavors. This move signifies a further escalation of the ongoing economic tensions with China.

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