insider brief
The US Treasury announced new restrictions on US investment in China’s quantum technology field, aimed at blocking advances in quantum computing that could enhance China’s military and intelligence capabilities. The rules prohibit U.S. companies from making certain investments in quantum and other sensitive technologies in China, require them to notify the Treasury Department before engaging in related transactions, and involve potential national security risks. Regulatory checkpoints for the above risks will be added. The rule supplements existing export controls and was enacted after extensive consultation with Congress, industry, and international allies to preserve U.S. dominance in critical technologies while limiting China’s progress in quantum innovation. This demonstrates our strategic efforts to achieve this goal.
The U.S. Treasury has issued new regulations that prohibit certain U.S. investments in China’s quantum technology sector and other cutting-edge technologies, according to a White House briefing on the move.
The regulation builds on President Biden’s August 2023 executive order restricting U.S. investment in quantum computing, artificial intelligence, and microelectronics, areas deemed critical to next-generation military technologies. It is. This is seen as another step in the Biden administration’s efforts to prevent sensitive technology from supporting China’s military and intelligence capabilities.
According to the Treasury Department, the move is aimed at curbing China’s advances in quantum technology that could eventually strengthen its military, surveillance and cybersecurity infrastructure. Quantum technologies, including quantum computing and quantum information science, have transformative potential for everything from breaking sophisticated encryption to building highly secure communications networks. U.S. officials say these advances pose risks if they fall under foreign control or contribute to foreign military modernization efforts.
In a Treasury statement on the new regulations, Paul Rosen, assistant secretary for investment security, said investments may include potential benefits associated with capital flows, such as access to talent and management advice. said.
“The Biden-Harris Administration is committed to protecting the national security of the United States and keeping critical advanced technologies out of the hands of those who could use them to threaten national security. Artificial Intelligence, Semiconductors , quantum technology is fundamental to the development of next-generation military, surveillance, intelligence, and certain cybersecurity applications, such as cutting-edge code-breaking computer systems and next-generation fighter jets. “We are taking targeted and concrete steps to ensure that it is not misused to facilitate the development of key technologies by those who could use them to threaten national security,” Rosen added. Support and access to investments and talent networks that often accompany such capital flows must not be used to help countries of concern develop military, intelligence, or cyber capabilities. Secretary Yellen said the Treasury Department is working extensively with stakeholders, experts, and allies to ensure the effectiveness of this measure and to ensure that this rule does not jeopardize the open investment environment that benefits the United States. supervised and directed the involvement in ”
In Rosen’s statement, the term “final rule” refers to a formal, legally binding rule that has undergone a draft, proposal, public comment, and review process. This does not mean that it will be the final decision on the regulation of these advanced technologies.
Expansion of current export controls
The policy aims to fill gaps in the U.S. regulatory framework by extending current export controls on sensitive technology to U.S. financial investments. Exports of quantum-related technology to China are restricted, but U.S. officials are concerned that investments in Chinese companies could inadvertently accelerate China’s development in these areas.
A White House statement said “countries of concern,” including China, are exploiting U.S. foreign investments to accelerate technological advances that could threaten U.S. national security. The Biden administration says it is critical to limit investments in quantum and related fields as China seeks technological parity with the United States in strategic areas such as secure communications, intelligence, and military command systems. Emphasized.
In addition to the outright ban, the rule also requires U.S. companies to notify the Treasury Department before undertaking certain transactions involving quantum technology. The requirement is intended to create a regulatory checkpoint for U.S. companies considering investments that could contribute to China’s quantum capabilities.
The Treasury Department statement emphasized that while open investment policies have long benefited the U.S. economy, unchecked capital flows into sensitive technology areas could conflict with national security interests. Limiting US investment in quantum technology in China is part of the administration’s strategy to protect US strategic advantages in military and intelligence applications.
According to a statement from the Department of the Treasury, the final rule defines key terms and provides details regarding the implementation of the program:
Obligations of U.S. Persons with respect to Covered Transactions. Categories of eligible and excluded transactions. Technical specifications for specific technologies and products in the fields of semiconductors and microelectronics, quantum information technology, and artificial intelligence. Information that U.S. persons must provide to the Treasury Department as part of the notification. Knowledge standards and expectations for U.S. persons to conduct reasonable and diligent investigation before entering into a transaction. Actions treated as violations of the final rule and penalties applicable for such actions.
Bipartisan consultations, meetings with allies and technology leaders
The rule follows months of consultation with a wide range of stakeholders, including bipartisan members of Congress, technology industry leaders, and foreign allies. U.S. officials sought to ensure that regulations addressed national security concerns without unnecessarily stifling private sector growth or impeding global partnerships. The authorities aim to strengthen their oversight capabilities by requiring notification of certain transactions, but the rules place outright restrictions on certain areas deemed too sensitive.
The regulatory changes come as the United States works to remain competitive in quantum technology amid rapid global advances. China’s investment in quantum research has increased significantly in recent years, supported by state-led efforts to place China among the world leaders in quantum technology. For U.S. officials, China’s Limiting capital investment in quantum fields is an essential safeguard.
The Treasury Department noted that the rule complements existing export controls that already restrict the transfer of sensitive quantum-related technology to China. By expanding surveillance to include financial transactions, the government aims to prevent the potential exploitation of U.S. capital and expertise that could strengthen China’s ambitions in critical technologies. He said there was.
