Congress considers China ban on investment, key technology transfers
In anticipation of President Trump's return, Congress is considering a spending bill that includes a ban on technology transfers to and private investments with Chinese entities.
The bill sets out broad prohibitions on outbound investment, and invokes national emergency powers under the International Emergency Economic Powers Act (IEEPA), a favored method during Trump's first term.
The bill establishes and begins funding for the COINS Act of 2024 (Comprehensive Outbound Investment National Security Act of 2024). It includes 2 years of funding and provides broad latitude for President Trump, the Secretary of the Treasury, and the Secretary of Commerce to appoint people as officers over this portfolio, (i.e., outside the competitive service system).
The COINS Act anticipates and prepares the Administration's broad sanction powers over all property within the United States in order to facilitate compliance, along with civil penalties and divestment of forbidden transactions. The regulations require the Federal government to further develop and curate a list of technologies deemed tied to national security.
The Act has a wide list of Prohibited Technologies including technologies and machines for design, production and packaging of semiconductors, hyper-sonic systems, and quantum computing. It also bans A.I. applications at certain technical levels. The list of prohibited semiconductors includes FDSOI, NAND and certain DRAM chips.
Additional items are designated as Notifiable Technologies, including semiconductors not included in the prohibited list, A.I. for military use, mass surveillance, and hacking, munitions, GPS, and nuclear technologies.
The restrictions have a limited exception for private equity with investments under 2 million dollars. Otherwise, business with Chinese nationals and entities tied to China's regime will require careful due diligence and adequate reporting.
It remains to be seen whether the bill with this language will pass the House, much less make it into law, but it bears watching as we move into the new year.