US to curb AI investment in China soon

US rules that will ban certain US investments in artificial intelligence in China are under final review, according to a government posting, suggesting the restrictions are coming soon.

The rules, which will also require US investors to notify the Treasury Department about some investments in AI and other sensitive technologies, stem from an executive order signed by President Joe Biden in August 2023 that aims to keep American investors' know-how from aiding China's military.

The final rules, which target outbound investment to China in AI, semiconductors and microelectronics and quantum computing, are under review at the Office of Management and Budget , the posting showed, which in the past has meant they will likely be released within the next week or so.

"It looks to me like they're trying to publish this before the election," said former Treasury official Laura Black, a lawyer at Akin Gump in Washington, referring to the Nov. 5 US presidential election. Black added that the Treasury office overseeing the regulations generally provides at least a 30-day window before such regulations go into effect.

The Treasury Department published proposed rules, opens new tab with a raft of exceptions in June and gave the public a chance to comment. The draft rules placed the responsibility on US individuals and companies to determine which transactions will be restricted.

A Treasury Department spokesperson declined to comment.

Black expects the final rules to further clarify the scope of coverage over artificial intelligence and the threshold for limited partners.

The proposed rules banned transactions in AI for certain uses, and involving systems trained in using a specified quantity of computing power. They required notification of transactions related to the development of AI systems or semiconductors not otherwise prohibited.

Publicly traded securities such as index funds or mutual funds, certain limited partnership investments, and certain syndicated debt financings were among proposed exceptions.