US President Joe Biden has signed an executive order banning certain new US investments in China in “sensitive technologies” such as chip manufacturing. In addition, the new regulations require that the government be notified of investments in other Chinese technology sectors, writes Reuters.

The long-awaited order authorizes the US Treasury Secretary to ban or restrict US investments in Chinese companies in three sectors: semiconductors and microelectronics, quantum information technology, and artificial intelligence systems.

The new regulations aim to prevent U.S. capital and expertise from helping China develop technologies that could support its military modernization and undermine U.S. national security. The order targets private equity, venture capital, joint ventures, and greenfield investments.

In a letter to Congress, Biden wrote that he was declaring a national emergency to address the threat of advances by countries like China “in sensitive technologies and products critical to military, intelligence, surveillance, or cybersecurity.” The White House said Biden consulted with allies on the plan and took into account feedback from the Group of Seven nations.

“For too long, American money has helped fuel the Chinese military’s rise,” said Senate Democratic Leader Chuck Schumer. “Today the United States is taking a strategic first step to ensure American investment does not go to fund Chinese military advancement.”

In response, China said it was “seriously concerned” about the new order and reserved the right to take action. According to China’s Ministry of Commerce, the regulation interferes with the normal operation and decision-making of enterprises and undermines the international economic and trade order.

The ministry also said that it hopes that the United States will respect the laws of the market economy and the principle of fair competition, and refrain from “artificially impeding global economic and trade exchanges and cooperation or creating obstacles to the global economic recovery.”

The Chinese Ministry of Foreign Affairs stated that the country is “strongly dissatisfied” and “strongly opposes the US insistence on imposing investment restrictions on China”.

A spokesman for the Chinese embassy in Washington said the White House had not heeded China’s “repeated expressions of deep concern” about the plan.

In addition, the spokesman said that more than 70,000 American companies do business in China. According to him, the restrictions will harm both Chinese and American businesses, hinder normal cooperation, and reduce investor confidence in the United States.