Congress to vote on new restrictions on US investment in China

Congress is set to vote in the coming days on legislation restricting US investments in China as part of a bill to fund government operations to mid-March, legislators said late on Tuesday.

In October, the Treasury finalised rules effective from January 2 that will limit US investments in artificial intelligence (AI) and other technology sectors in China that could threaten US national security.

The bill expands on those restrictions and also includes other provisions aimed at concerns about China, including a requirement to study national security risks posed by Chinese-made consumer routers and modems and mandate reviews of Chinese real estate purchases near additional national security sensitive sites.

“China is an economic adversary and we must take bold action to safeguard our future against the Chinese Communist Party,” said Senator Bob Casey, a Democrat.

“This legislation takes bold action to restrict US investments to stop our national security technology from getting into the hands of our adversaries before they can use it against us.”

The Chinese embassy in Washington did not immediately comment.

The bill will also require the Federal Communications Commission (FCC) to publish a list of every entity that holds an FCC licence or authorisation and has any ownership by foreign adversarial governments, including China, to ensure the commission “knows when telecommunications and technology companies have a connection and foreign adversary”.

Washington is moving on a number of fronts to further restrict Chinese products.

An annual defence bill could ban China-based DJI and Autel Robotics from selling new drones in the US market, while the commerce department is working to finalise rules in the coming weeks that would bar Chinese carmakers from selling vehicles in the US and bar China Telecom from US operations.

Legislators have criticised major American index providers for directing billions of dollars from US investors into stocks of Chinese companies the US believes are facilitating the development of China’s military.

The Treasury rules and legislation cover semiconductors and microelectronics, quantum information technologies and certain AI systems aimed at preventing investments in Chinese technologies such as cutting-edge code-breaking computer systems or next-generation fighter jets.

Representative Rosa DeLauro, the top Democrat on the house appropriations committee, said, “for years I have watched American dollars and intellectual property fuel the Chinese Community Party's technology and capabilities. This legislation builds on the regulations put into place this year by the Biden administration and sets the stage for continued bipartisan efforts to protect and rebuild our critical national capabilities.”

The outbound legislation covers technologies listed in the Treasury order and adds additional AI models that use some semiconductors, AI systems designed for exclusive military or government surveillance end use, hypersonic systems and additional export-controlled technologies.

Reuters