Outbound Regulation is Inbound: US Treasury Finalizes Rules for Certain US Technology Investments in China

The US Department of the Treasury published its final regulations covering the national security review process for outbound investments on October 28, 2024. The regulations impose notice and prohibition requirements on specific technology sectors determined by President Joseph Biden to directly impact US national security concerns. Although focused on China (including Hong Kong and Macau), the regulations and the underlying executive order justifying the regulations leave open the possibility of adding more technology sectors and countries of concern. With the regulations already in effect as of January 2, 2025, investors must be ready to update diligence processes, address these issues for in-process investments, and assess how future investments in these technology sectors and in China will remain compliant.