Defense Spending Law Restricts US Investment in Chinese Tech Companies

A defense spending bill signed into law Thursday (Dec. 18) by President Donald Trump reportedly includes provisions that restrict United States investment in Chinese tech firms.

The National Defense Authorization Act ’s outbound-investment provisions enable the White House to monitor and, in some cases, prohibit U.S. investments in Chinese companies working on artificial intelligence, quantum computing and advanced semiconductors, The Wall Street Journal reported Thursday (Dec. 18).

The law allows the White House to ban some deals and require companies to report others, according to the report.

Before being signed into law by the president, the National Defense Authorization Act was passed by the House on a vote of 312 to 112 and by the Senate on a vote of 77 to 20, according to Congress.gov.

The legislation’s sponsor, Sen. John Cornyn of Texas said in a Wednesday (Dec. 17) press release , before the bill was signed into law, that the outbound investment measures present “a generational opportunity to confront the threats China, Iran, North Korea and others pose to our national and economic security. This landmark legislation would prohibit and require notification of U.S. investments in certain technologies in countries of concern, ensuring American ingenuity, innovation and investment do not end up in the hands of adversaries like the Chinese Communist Party to be weaponized against us.”

The Senate minority leader, Sen. Chuck Schumer of New York, said in the same release that the outbound investment provisions mark the Senate’s “steadfast commitment to stopping the Chinese Communist Party’s development of advanced technology that threaten America’s national security. It is vital that we continue to prevent the harmful flow of U.S. investment into China for the development of technology like [semiconductors], AI and quantum computing.”

It was reported in October that a bipartisan investigation by a House committee found that inconsistencies in export controls among the U.S. and its allies had allowed Chinese companies to legally buy nearly $40 billion worth of sophisticated chipmaking tools.

These inconsistencies enabled non-U.S. manufacturers to continue selling to Chinese firms that American suppliers were barred from serving.

The committee urged allied nations to adopt broader, coordinated restrictions on chipmaking equipment exports.