Citing National Security, Biden Limits AI Investments in China

President Biden has signed an executive order regulating U.S. companies’ investments in “countries of concern” in technologies that are “critical to national security,” including semiconductors and microelectronics, quantum information technologies and artificial intelligence. The administration specifically identified China, including the Special Administrative Regions of Hong Kong and Macau, as a country of concern.

The order prohibits venture capital and private equity firms from investing in “sensitive technologies with implications for military innovation,” according to a White House press release. The U.S. Treasury will propose more specific definitions in a rule-making process that will be open to public comment before going into effect.

Calling its action a “small yard, high fence” approach, the White House said that “cross-border investment flows have long contributed to U.S. economic vitality. We are committed to taking narrowly targeted actions to protect our national security while maintaining our longstanding commitment to open investment. This program will seek to prevent foreign countries of concern from exploiting U.S. investment in this narrow set of technologies that are critical to support their development of military, intelligence, surveillance, and cyber-enabled capabilities that risk U.S. national security.”