FIGHT China Act Proposes New Rules Blocking and Tracking US Investments in Sensitive Chinese Tech Sectors

The Foreign Investment Guardrails to Help Thwart (FIGHT) China Act sets up new federal powers aimed squarely at controlling U.S. money flowing into specific high-tech sectors in China. The core idea is to prevent American investment from potentially boosting China's capabilities in areas deemed critical to national security. This involves giving the Treasury Secretary authority to outright prohibit certain transactions and requiring U.S. individuals and companies to notify the government about others within 30 days of completion.

Drawing Lines in the Sand: Prohibited Investments

This bill empowers the Secretary of the Treasury, defined under Sec. 2, to block U.S. persons—that's citizens, residents, U.S.-based companies, or anyone physically in the U.S.—from knowingly engaging in "covered national security transactions" with specific Chinese entities (Sec. 201). What counts? Think investments like acquisitions, certain loans, or joint ventures involving what the bill calls "prohibited technology." This includes sensitive areas like advanced semiconductors, specific artificial intelligence systems used for things like surveillance or weapons targeting, quantum computing, and hypersonic systems. The targets are "covered foreign persons," essentially entities tied to China (including Hong Kong and Macau) through incorporation, control, or significant state ownership, particularly if they're involved in these tech sectors (Sec. 102, Sec. 201 definitions). Trying to structure a deal to get around these rules is also banned. While there's a presidential waiver possible for national interest, it requires notifying Congress. Penalties for violations are steep: civil fines up to $250,000 or double the transaction value, and the government could even force the sale of an improperly acquired investment.

Show Your Cards: When Notification is Required

Even if a deal isn't outright prohibited, it might still require paperwork. The bill mandates regulations (within 450 days) requiring U.S. persons to notify Treasury within 30 days after completing transactions involving "notifiable technology" with these same covered foreign persons (Sec. 201). "Notifiable technology" covers areas like less advanced (but still significant) semiconductor design and manufacturing, and AI systems not meeting the "prohibited" threshold but still relevant to national security. So, if a U.S. venture capital firm invests in a Chinese chip company that falls into this category, they'd need to report it post-transaction. Failure to notify carries the same hefty potential penalties as prohibited transactions ($250k or 2x deal value). The goal seems to be building a clearer picture of U.S. investment flows into these sectors, with annual reports to Congress summarizing trends and assessing impacts (Sec. 201).

Beyond Deals: Sanctions and Stock Restrictions

It's not just about future investments. Title I gives the President authority to impose sanctions (like blocking property) on foreign persons identified as being knowingly involved in China's defense or surveillance tech sectors (Sec. 101). This uses powers similar to existing economic sanctions programs under the International Emergency Economic Powers Act (IEEPA). Furthermore, Title III targets existing investments by requiring the President to issue rules (within 365 days of enactment) prohibiting U.S. persons from holding securities of companies identified on the Treasury's Non-SDN Chinese Military-Industrial Complex Companies List (Sec. 301). There's a 365-day window after the rules are set for investors to divest, meaning sell off, those holdings. This section also pushes for better information sharing between government agencies to identify which Chinese companies should be on this list. The bill allocates $150 million per year for the first two years to Treasury (transferable to Commerce) to get this complex system up and running, including hiring staff (Sec. 4).