U.S.-China AI rivalry forces countries to navigate competing technology blocs

The U.S. Treasury Department unveiled a proposal on Thursday aimed at curbing substantial investments in AI, biotechnology, and supercomputing within China, Russia, North Korea, and other nations deemed "countries of concern." These restrictions stem from the government's ongoing efforts to prevent foreign adversaries from amassing military prowess through such investments.

The initiative commenced in 2023 when President Joe Biden signed an executive order, placing limitations on outbound U.S. investments in sectors like semiconductors, quantum computing, and AI bound for China. Subsequently, the Treasury established the Outbound Investment Security Program. In December 2025, Congress enacted legislation that further expanded and codified this program, targeting additional technologies and countries, namely Cuba, Iran, North Korea, and Russia.

The proposed rule carries a tighter scope, focusing on investments surpassing $50,000 and incorporating hypersonic systems, AI, supercomputing, and biotechnology. The term "superintelligence" or SI was favored by Treasury in place of the broader designation of artificial intelligence. A senior fellow at the Foundation for Defense of Democracies, Craig Singleton, commented that the rule "sends an important signal to markets that Washington is tracking where U.S. capital is flowing and what capabilities it is helping build."

Jason Chipman, a former Justice Department lawyer specializing in cybersecurity, investment rules, and export controls, highlighted that the new rule mandates more robust compliance programs to manage risks. The rule implementing the 2025 law, the Comprehensive Outbound Investment National Security Act, would only apply to investments exceeding $50,000 and would exclude numerous financial investments, such as stock purchases.

Treasury will solicit public comments on the proposal before finalizing the rule. Former U.S. trade official Ryan Majerus, now at King & Spalding, noted that this is merely the initial phase in a lengthy process towards enforcing changes and imbuing the outbound investment program with more robust measures. The Chinese Foreign Ministry expressed reservations, urging Washington to adhere to market economy principles and refrain from meddling in normal economic and trade relations.

They argued that such measures did not serve any party's interests and advocated for close monitoring and protective actions by China. The United States and China, the world's two largest economies, have been engaged in an economic and technological rivalry since Trump's first term. They have restricted the export of sensitive technologies and essential products, imposed tariffs on each other's goods, and recently settled a $200,000 fine against a U.S.-based company for overlooking reporting requirements for an investment in a Chinese AI and robotics firm.