HomeTop StoriesExplainer-US initiates process to limit certain investments in key technology in China

Explainer-US initiates process to limit certain investments in key technology in China

By Andrea Shalal and Karen Freifeld

WASHINGTON (Reuters) – The White House on Wednesday announced plans to ban some U.S. investments in certain sensitive technologies in China and require the government to be notified of other investments, but said it could take some time before the steps of become strong.

President Joe Biden on Wednesday signed an executive order directing the U.S. Treasury Department to regulate certain U.S. investments in narrowly defined areas such as semiconductors, quantum computing and artificial intelligence, senior government officials said.

Following are some important details:


The order contains an intent to regulate investment in certain “countries of concern”, with a separate annex citing China, Hong Kong and Macau as the first targets. More countries could be added in the future, a senior official told Reuters.

Administration officials insisted that the proposed rule would require notification of many investments and ban some. The aim is to avert the “most acute” national security risks by regulating investment in Chinese companies and entities working on a limited number of technologies that could provide China with military and intelligence benefits.

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The rules are not retroactive and only apply to future investments, an administrative official said.


Biden’s executive order authorizes the US Treasury Department to regulate certain US investments. To do that, Treasury will issue an advance notice of proposed regulations, giving companies and investors time to comment.

The administration then reviews the public comments from stakeholders and proceeds with a formal notification of the proposed regulation, with the aim of ensuring that public comments are forthcoming.

Experts said the process could take months to complete, pushing the new regulations well into 2024, a presidential election year, or even longer.

The Treasury would ultimately have the power to investigate potential violations and pursue available penalties, officials said, adding that the minister will have the power to reverse future investments.


Officials said the steps had been carefully discussed with allies and partners, and that US officials, including Treasury Secretary Janet Yellen, had clearly communicated to Beijing that Washington intended to restrict measures narrowly.

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No coordinated action by allies was expected on Wednesday, although Britain and the European Union have already declared their intention to go down the same path, and the Group of Seven Advanced Economies agreed in June that restrictions on outward investment should be part of the general toolkit.

(Reporting by Andrea Shalal and Karen Freifeld; additional reporting by David Shepardson; editing by Jonathan Oatis)

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