US Treasury Proposes New Rules to Restrict High-Tech Investments in China and Other Adversaries

WASHINGTON — The US Treasury Department has proposed a new rule aimed at cracking down on American high-tech investments in China, Russia, North Korea, and other designated countries of concern. The regulatory move is part of an ongoing government effort to prevent foreign adversaries from utilizing US investments to enhance their military capabilities.

The framework traces back to 2023, when an executive order was signed to restrict outbound investments in sectors like semiconductors, quantum computing, and artificial intelligence within China. This foundation led to the establishment of the Treasury's Outbound Investment Security Program. In December 2025, Congress codified and expanded this program through the Comprehensive Outbound Investment National Security Act to cover additional technologies and foreign nations, including Cuba and Iran.

The newly proposed rule broadens these restrictions to encompass hypersonic systems, supercomputing, biotechnology, and artificial intelligence. Notably, the Treasury utilized the term “superintelligence” or SI in its documentation. The regulations will apply specifically to investments exceeding $50,000, while excluding certain financial transactions such as standard stock purchases.

Legal and market experts have noted the potential operational impact of the proposed framework. Craig Singleton, a senior fellow at the Foundation for Defence of Democracies, stated that the screening of outbound investments recognizes how capital can accelerate military-relevant capabilities just as effectively as direct technology transfers. Meanwhile, Jason Chipman, a partner at WilmerHale, indicated that the rule will necessitate more substantial compliance programs for organizations managing these risks.

The inclusion of Russia in the proposed rule follows a recent waiver of sanctions by President Donald Trump after a diesel deal with Russian President Vladimir Putin. The Treasury Department will review public comments on the proposal before drafting a final rule. Ryan Majerus, a partner at King & Spalding and a former US trade official, remarked that the process marks an early step toward more enforcement-minded changes.

In response to the announcement, the Chinese Foreign Ministry criticized the measure, stating that the US should respect market economy principles and avoid interfering in normal economic cooperation. A ministry spokesperson added that overstretching national security concepts serves no one's interests and that China will monitor developments to protect its interests.

The United States and China have maintained an ongoing economic and technological rivalry, implementing various export restrictions and tariffs over recent years. While temporary truces have been discussed, targeted enforcement actions persist, including a Treasury Department fine issued in July against a US-based company for failing to report a subsidiary's investment in a Chinese artificial intelligence and robotics firm.

"This regulatory update highlights the tightening intersection between cross-border capital flows and national security compliance. For businesses and venture participants operating in sectors like artificial intelligence, biotechnology, and supercomputing, heightened scrutiny means that outbound investment strategies will require rigorous compliance frameworks. Founders and investors must carefully monitor how these evolving regulatory definitions and enforcement mechanisms impact international partnerships and capital allocation." — Dr. Shishir Gupta, Founder & CEO, StartupLanes