Recently, the US government issued a new rule aimed at preventing US individuals and companies from investing in China's cutting-edge technology. This rule prohibits providing financial and technical support to China's development of advanced semiconductors, artificial intelligence, quantum computing and other technical fields, becoming another key move in the Sino-US technology game. Beijing strongly opposes this, believing that this move is further evidence of the US's attempt to contain China's technological rise. With the introduction of this regulation, the global technology competition situation may become more tense.

The content and impact of the new rule: locking in cutting-edge technology

The US Treasury Department officially finalized this new rule on October 28, aiming to further tighten the ties between the United States and China in the field of cutting-edge technology. The regulation implements the executive order signed by President Biden in 2023, specifically targeting semiconductors, microelectronics, quantum computing and artificial intelligence. The new rule will officially take effect on January 2, 2025, and will impose strict restrictions on certain transactions in related fields.

According to the new rule, all investment activities related to quantum computing technology will be prohibited, covering the research and development and production of quantum computers and their key components. In addition, some transactions in the semiconductor and artificial intelligence fields will also be strictly regulated. No U.S. company or individual may participate in the development and investment of these technologies unless exempted or approved by the government.

In addition to a comprehensive ban on transactions in the field of quantum computing, the new regulations also establish mandatory reporting requirements for other fields. If relevant companies are involved in semiconductor or artificial intelligence technology, they must report their transactions with China to the U.S. Treasury in advance. The U.S. government will conduct strict reviews of such transactions to ensure that these technologies do not flow to opponents that may threaten U.S. national security.

Preventing the outflow of technology and talent: non-material interests are also restricted

This new regulation not only prohibits transactions related to physical products and equipment, but also covers the transfer of a series of intangible interests. The new regulations clearly state that in addition to the direct transfer of technology and equipment, non-material interests such as management capabilities, talent networks, reputation enhancement and market access involved in certain transactions are also within the scope of prohibition. This means that U.S. investment companies cannot only provide financial support to Chinese companies, but also need to avoid improving the management level and global competitiveness of Chinese companies through cooperation.

Stephen Izer, vice president of the U.S. Information Technology and Innovation Foundation, commented that the new regulations will send a clear signal to U.S. technology investors that they must act cautiously and avoid any transactions that may help China gain an advantage in cutting-edge technology and technology. He pointed out that the loss is not only reflected in the reduction of funds, but more importantly, the management experience and technical capabilities brought by American investors. These intangible resources are crucial to the development of enterprises.

Special attention to quantum computing

Quantum computing technology has become the most concerned area in the new regulations due to its potential huge military and national security application value. The US government is worried that China's quantum computing technology will provide it with the possibility of deciphering US encrypted information, thereby threatening the US network security and national secrets. According to the analysis of Daniel Gonzalez, a senior scientist at Rand Corporation, once quantum computing technology matures, it will bring subversive power to offensive cyber operations. Chinese researchers are already developing quantum algorithms that can crack the encryption codes of US financial and government systems.

Gonzalez also mentioned that many US venture capital companies have participated in the development of Chinese technology companies, including helping TikTok (TikTok International Edition) develop its core artificial intelligence algorithms. Although these investments did not violate US law at the time, the new regulations are intended to plug this potential security loophole and prevent US advanced technology from being used for military purposes in hostile countries.

Beijing's strong response: The Sino-US trade war has further escalated

China quickly responded strongly to the new regulations. Chinese Foreign Ministry spokesman Lin Jian reiterated China's position at a press conference, saying that the US move was an attempt to curb China's rise and violated the principle of fair competition. Lin Jian said that China will take all necessary measures to firmly safeguard the legitimate rights and interests of its own enterprises and has lodged solemn representations with the United States.

China's anger is not only due to the direct blow of the new regulations to China's high-tech industry, but also reflects the strategic confrontation between China and the United States in the global technological competition. In recent years, the United States has taken more and more restrictive measures on China's technological development, especially in the fields of 5G technology, artificial intelligence and semiconductors. The United States believes that these technologies are not only vital to the economy, but also related to national security. Therefore, preventing China from obtaining these key technologies has become one of the core contents of the US policy toward China.

Establishment of the US Global Transactions Office

To effectively regulate these foreign investments, the US Treasury will establish a Global Transactions Office under its Office of Investment Security. The new agency is responsible for managing and supervising the overseas investment behavior of US companies to ensure that they do not pose a threat to national security. With the introduction of the new regulations, US investment companies will face stricter scrutiny worldwide, especially transactions related to China will be subject to key supervision.

The background of the US government's move is that it is worried that some US companies will help Chinese technology companies acquire key technologies and capabilities through venture capital and cooperation projects. By setting up a global transaction office, the United States hopes to better control economic and technological exchanges with China and reduce potential security threats.

Outlook: Sino-US technological competition intensifies, and the global situation becomes more complicated

With the introduction of the new regulations, the competition between China and the United States in the high-tech field will further intensify. This new regulation not only prevents the flow of US capital and technology to China, but also brings more uncertainty to the global technology industry. China has shown its determination to become a technological power and has made continuous progress in fields such as quantum computing and artificial intelligence. The United States has tried to curb China's technological rise through this series of policies.

At the same time, the implementation of this new regulation may also have a chain reaction on the global technology industry. Many international companies have extensive cooperation and investment between China and the United States. Once the technological competition between China and the United States escalates further, the global supply chain will face new challenges. Companies will have to readjust their investment and cooperation strategies to cope with the increasingly complex international situation.

The US investment restrictions in China's cutting-edge technology sector mark a new stage in global technology competition. This new regulation not only restricts the flow of funds, but also blocks the transfer of technology and management experience. As the technological competition between China and the United States intensifies, global companies will face more challenges, and the pattern of international scientific and technological cooperation will undergo profound changes.