TMTPost -- China issued serious warnning against the planned new curbs on high tech industries including artificial intelligence (AI).


Credit：Xinhua News Agency

China severely opposes a proposed rule that the U.S. Treasury Department announced last Friday to restrict U.S. investment in China, and reserves the right to take corresponding measures, a spokesperson for the Ministry of Commerce of China (MOFCOM) responded Monday, according to the ministry’s website.

The U.S. has repeatedly stressed that it has no intention to "decouple" from China and has no intention to obstruct China's economic development, but it insists on releasing the abovementioned proposed rules to restrict US companies' investment in China and suppress the normal development of China's industries, which is a typical abuse of the concept of national security, the spokesperson said.

The spokesperson noted such move impacts the normal economic and trade cooperation between Chinese and American companies, undermines international economic trade order and disrupts the security and stability of the global industrial chain and supply chain. The person called for the U.S. to respect the rules of a market economy and the principle of fair competition, stop the politicization or weaponization of trade and commerce issues, and cancel investment restrictions on China, so as to create a good environment for Sino-US economic and trade cooperation.

The U.S. Department of the Treasury issued a proposed rule to implement an executive order signed by U.S. President Joe Biden last August. The executive order, titled “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” (the Outbound Order), aims to prevent the exploitation of U.S. outbound investments by countries of concern seeking to develop sensitive technologies or products that are critical to the next generation of military, intelligence, surveillance, or cyber-enabled capabilities that pose national security risks to the United States, according to the department.

The Outbound Order was widely deemed as the new effort to prevent technologies and money from the United States flowing to China. Through the order, Biden directed Janet Yellen, the Secretary of the Treasury, to issue regulations that (1) prohibit U.S. persons from engaging in certain transactions involving certain technologies and products that pose a particularly acute national security threat to the United States and (2) require U.S. persons to notify the Treasury department of certain other transactions involving certain technologies and products that may contribute to the threat to the national security of the United States.

The Outbound Order identifies three categories of national security technologies and products to be covered by the program: semiconductors and microelectronics; quantum information technologies; and AI, which are considered critical for the military, intelligence, surveillance, or cyber-enabled capabilities.

Yellen may require, following new regulations, prohibit and prevent any transaction by a foreign entity controlled by United States person who engages in prohibited transaction. The entity, under the Outbound Order, means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization. The definition suggests the order effectively targets investments by U.S. private equity (PE) and venture capital firms as well as joint ventures in semiconductor, quantum computing, AI and other key strategic technologies, in which China is ratcheting up efforts to drive the development.

The proposed rule released Friday provides details on key concepts and aspects of the program’s implementation, such as categories of covered transactions and excepted transactions, and technical specifications to inform the scope of covered transactions based on certain technologies and products in areas of semiconductors and microelectronics; quantum information technologies; and AI. The U.S. Treasury department is seeking comment on the proposal through August 4 and then is expected to issue a final rule.