Treasury Proposes Rule Curbing U.S. High-Tech Investments in China, Russia, and North Korea

The Treasury Department on Thursday proposed a new rule that would restrict American high-tech investments flowing to U.S. adversaries, including China, Russia, and North Korea, under an expanded version of the Outbound Investment Security Program.

The proposed rule targets a broad set of advanced technologies, including artificial intelligence, hypersonic systems, quantum information technologies, high-performance computing, and supercomputing — sectors the department considers strategically sensitive in the context of national security.

The Outbound Investment Security Program, known as OISP, has served as the primary regulatory framework governing the flow of U.S. capital into technologies that could confer military or intelligence advantages on foreign adversaries. Thursday's proposal would extend its reach to additional technology categories not previously covered under existing restrictions.

The countries named in the proposal — China, Russia, and North Korea — are designated "countries of concern" under the program, a classification that subjects investments involving their entities to heightened scrutiny or outright prohibition.

The inclusion of AI-related investments reflects growing concern among U.S. officials that American capital, whether through venture funding, joint ventures, or research partnerships, could accelerate the development of advanced AI systems in adversarial nations.

Quantum information technologies and high-performance computing were also added to the expanded restrictions, underscoring the administration's assessment that those fields carry comparable strategic risk to AI development.

The proposal does not yet carry the force of law. As a notice of proposed rulemaking, it opens a public comment period before any final rule takes effect, giving industry groups, financial institutions, and affected companies an opportunity to respond.

The outbound investment restrictions represent a complement to existing inbound controls — such as those administered by the Committee on Foreign Investment in the United States — that scrutinize foreign acquisitions of American companies. Together, the two frameworks reflect a broader effort to limit technology transfer in both directions across sensitive sectors.

The rule's expansion comes as congressional lawmakers on both sides of the aisle have pressed the executive branch to tighten oversight of U.S. capital flows into China's technology sector, citing concerns that American investment has helped fund advances in semiconductors, surveillance technology, and military systems.

How the final rule is shaped will depend in part on the feedback Treasury receives during the comment period, with industry stakeholders likely to push back on definitions of covered technologies and the scope of entities subject to review.

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