WASHINGTON – The US Treasury Department, seeking to prevent China’s military from gaining an edge in advanced technologies, issued a rule on Monday to restrict and monitor US investment in China in artificial intelligence, computer chips and quantum computing.

The completed rule results from a executive order issued in August 2023 by President Joe Biden. The order sought to limit the access that “concerned countries” — specifically, China, Hong Kong and Macau — have to US dollars to finance technologies that could be used, for example, to break codes or develop aircraft state-of-the-art combat. It will take effect on January 2.

“American investments … must not be used to help countries of interest develop their military, intelligence and cyber capabilities,” said Paul Rosen, Treasury’s assistant secretary for investment security. He noted that investments can mean more than money; they can provide “intangible benefits”, including managerial help and assistance in finding top talent and accessing other sources of funding.

Blocking China’s high-tech ambitions is one of the few issues that enjoys broad support in Washington from both Republicans and Democrats.

Biden imposed a stiff tariff on Chinese electric vehicles in May. He also imposed export controls to prevent the Chinese from acquiring advanced computer chips and the equipment to make them. Former President Donald Trump has vowed to dramatically raise tariffs on all imports from China if voters return him to the White House.

The Biden administration solicited comments from companies and US allies before releasing the final version.

In addition to blocking investments, the rule requires Americans and companies in the United States to notify the US government of transactions involving “technologies and products that may contribute to a threat to the national security of the United States.”

Violators can be hit with fines of up to $368,136 or twice the value of the prohibited transaction, whichever is greater. The Treasury is establishing an Office of Global Transactions to oversee the new rule.