The US government is finalising rules to ban investments in artificial intelligence in China with an expected release within the next week or so. The rules, which will also require US investors to notify the Treasury Department about some investments in AI and other sensitive technologies, are derived from President Joe Biden’s August 2023 executive order efforts to safeguard American knowledge and prevent its use in China’s military advancements.

The regulations will restrict US investments in AI, semiconductors, microelectronics, and quantum computing in China and require US investors to notify the Treasury Department about investments in sensitive technologies.

The proposed rules will apply to certain types of transactions, including the acquisition of equity interests, provision of debt financing and joint ventures with Chinese companies engaged in sensitive technologies. US persons, including citizens, residents and entities organised under US law will be part of these regulations.

”It looks to me like they’re trying to publish this before the election,” said former Treasury official Laura Black, a lawyer at Akin Gump in Washington. Black added that the Treasury office overseeing the regulations generally provides at least a 30-day window before such regulations go into effect.

The Treasury Department published the proposed rules and a raft of exceptions after an initial comment period following the executive order.

A spokesperson for the Treasury Department did not immediately respond to a request for comment.

Black expects the final rules to further clarify the scope of coverage over artificial intelligence and the threshold for limited partners.

The restrictions are part of an effort to prevent U.S. know-how from helping the Chinese develop sophisticated technology.