The US Treasury Department announced on its official website on October 28 that after more than a year of deliberation, it has decided to restrict investments by US companies and individuals in China in the fields of semiconductors, artificial intelligence, and quantum technology. The new regulations will take effect from January 2025.

The proposal for the new regulations originated from an executive order issued by US President Biden in August 2023. The final framework is largely consistent with the proposal released in June this year. The aim is to prevent US capital and expertise from being used to help China develop key technologies that could give Beijing a military advantage.

The restricted technologies include three categories: semiconductors and microelectronics, quantum information technology, and artificial intelligence.

Specific restrictions include:

Semiconductors and microelectronics: Prohibited transactions related to certain electronic design automation software, certain manufacturing or advanced packaging tools, the design or manufacture of certain advanced integrated circuits, advanced packaging technology for integrated circuits, and supercomputers.

Quantum information technology: Prohibited transactions related to the development or production of quantum computers, the production of any critical components required for the development or production of quantum computers, the development or production of certain quantum sensing platforms, and the development or production of certain quantum networks or quantum communication systems.

Artificial intelligence (AI) systems: Prohibited transactions related to the development of any AI systems specifically designed or intended for certain end-uses.

Additionally, for investments in less advanced technologies, investors are required to notify the US Treasury Department.

Certain categories of capital flows are exempt, including publicly traded securities and some limited partnership investments.

A spokesperson for China's Ministry of Foreign Affairs expressed strong dissatisfaction and firm opposition to the US investment restrictions on China and has lodged solemn representations with the US.

These restrictions represent a new move by the US to curb China in high-tech fields and are part of the technological competition between China and the US. The US claims that these measures are to protect national security, while China views them as economic coercion and technological bullying against China.

"Further restrictions on technology and military exports to China have confused US companies," media reports stated. Regardless of the outcome of the US presidential election in early November, the US business community will face more difficulties.

Someone once said, 'Embargo them for seven or eight years, and China will have everything.'