On August 9, 2023, the Biden administration issued a much-anticipated Executive Order establishing a new regime to limit certain U.S. investments in key Chinese technology sectors to prevent the financing of Chinese military advancement. The order, once implemented via regulation, will prohibit U.S. persons from investing in, or engaging in certain other transactions with, Chinese companies engaged in specified conduct involving semiconductors and microelectronics, quantum information technologies, and artificial intelligence. The regulations will likely come into force in 2024 after multiple rounds of public comment, including an initial 45-day comment period that is now underway on an advanced notice of proposed rulemaking (“ANPRM”) issued by the U.S. Department of the Treasury (“Treasury”).
The regulations will prohibit some investments altogether, while others will be subject only to official notification requirements. Treasury, which will implement and enforce the restrictions, stated that it anticipates exempting “certain transactions, including potentially those in publicly traded instruments and intracompany transfers from U.S. parents to subsidiaries.”