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Bipartisan House Bill Could Apply Outbound Investment Rules to More Chinese Tech Sectors

A new House bill with bipartisan support could expand the Treasury Department’s upcoming outbound investment prohibitions to cover more Chinese technology sectors and additional countries, including Russia, Iran and North Korea.

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The Preventing Adversaries from Developing Critical Capabilities Act would “ensure there are vital restrictions and enhanced transparency on outbound investment to safeguard America,” said Reps. Michael McCaul, R-Texas, and Gregory Meeks, D-N.Y., the top two lawmakers on the House Foreign Affairs Committee.

Although Treasury is working to write regulations to either block or require notifications for investments in China’s semiconductor, artificial intelligence and quantum technology sectors (see 2308090066 and 2310050035), the bill also would require the administration to place restrictions on investments in China’s hypersonics sector and high-performance computing, or supercomputing, industry. The bill lists Russia, Iran and North Korea as additional countries of concern that also should be subject to investment restrictions, as well as “any other country the President deems necessary to ensure” those countries aren’t able to evade the restrictions.

The legislation also would require the president to annually review and update a list of the technology categories that are subject to the prohibitions. It also calls for formal notice and public comment periods before new restrictions are implemented.

McCaul and Meeks said the bill builds on efforts earlier this year by Sens. Bob Casey, D-Pa., and John Cornyn, R-Texas, who pushed to include a notification regime for certain outbound investments in the FY 2024 National Defense Authorization Act (see 2307260029 and 2307280052). “We know Beijing is developing technological capabilities with the intent to endanger our national security, and U.S. dollars should not help those efforts,” McCaul and Meeks said.