Aiming to protect national security and prevent U.S. capital from aiding China's military, President Joe Bidenlast month restricting new U.S. investments in sensitive Chinese technologies. The Treasury Department subsequently kicked off a rule-making process to implement the order, and financial firms have been rushing to meet a Sept. 28 to provide input. The rules are expected to be implemented sometime next year.
Among their key concerns: how the rules would apply to U.S. persons; which specific Chinese entities would be subject to the restrictions; and better defining a proposed exemption for publicly traded securities. That means investors have to figure out which investments come under the scope of the new rule and how to comply, creating significant compliance costs and legal risks.They may also bar U.S. persons from "knowingly directing" covered transactions by non-U.S. persons. But the threshold for knowledge, or what directing means, is unclear.