US plans to curb investment into Chinese chips and AI are ‘harmful’, Beijing says, as country braces for reduced capital

Planned regulations could curb the transfer of investments and expertise in ‘critical sectors’ such as advanced semiconductors, AI and quantum computing

The move, which analysts say would decrease capital flows between China and the US, is ‘harmful and serves no one’s interest,’ Beijing said

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The US is weighing additional curbs on investment in China related to critical tech sectors including advanced semiconductors, artificial intelligence, and quantum computing. Photo: Shutterstock

Dylan Buttsin Hong KongandBen Jiangin Beijing

Published: 10:30pm, 2 Jun 2023Updated: 12:32am, 3 Jun 2023

Washington is working on new regulations that would limit capital and information flows into sensitive technologies in China such as chips and artificial intelligence (AI), according to comments from a US Treasury official, drawing condemnation from Beijing and warnings from analysts about declining capital flows to Chinese start-ups.

The plans, referenced on Wednesday by Paul Rosen, the assistant secretary of the treasury for investment security, would allow Washington to exert greater control over the transfer of “US investment dollars that come with know-how and expertise” in specific sectors and sub-sectors such as advanced semiconductors, AI and quantum computing.

China Foreign Ministry spokeswoman Mao Ning firmly opposed the news on Thursday, saying the US was “politicising and weaponising trade and sci-tech issues”, creating obstacles for normal technological cooperation and disrupting global supply chains.

“Such practice is harmful and serves no one’s interests,” she added.

AI, quantum computing and the semiconductors responsible for providing these technologies with the necessary computational power have been a growing point of contention between the US and China due to their presumed potential to affect national security. Rosen said the purpose of the curbs is to prevent China from obtaining resources that could be used to gain enhanced military or intelligence capabilities.

It echoed previous reports that the Biden administration was working to finalise an executive order, slated for this summer, to restrict certain outbound investments into China’s hi-tech industries. A Beijing spokeswoman acknowledged the reports in April, saying they would monitor the situation and strongly oppose such policies.