New FIGHT China Act Bans U.S. Investment in Specific AI, Chip Tech; Imposes Asset Freezes on Targeted Foreign Entities

The new Foreign Investment Guardrails to Help Thwart China Act of 2025 (FIGHT China Act) is a major policy shift that puts the U.S. government squarely in the middle of certain international business dealings. This bill isn't just about trade tariffs; it’s about cutting the flow of U.S. investment and technology to specific sectors in the People's Republic of China, Hong Kong, and Macau. It grants the Treasury Secretary sweeping new powers to freeze assets, ban investments, and slap serious penalties on anyone breaking the rules. The core idea is to protect U.S. national security by starving specific foreign entities of capital and advanced tech.

The Treasury Secretary Gets a New Set of Keys

Title I of the Act hands the President—who will delegate the authority to the Treasury Secretary—the power to impose sanctions, including asset freezes, on any "covered foreign person" using the International Emergency Economic Powers Act (IEEPA). Think of IEEPA as the government's emergency brake on foreign economic dealings. A “covered foreign person” is broadly defined, including not only entities set up in China or controlled by the Chinese government, but also anyone owned 50% or more by those entities, or even members of the Chinese Communist Party Central Committee, provided they do significant business in the defense or surveillance technology sectors. For U.S. persons doing business internationally, this means the risk of having a foreign partner suddenly designated and their assets frozen just went up significantly.

The Investment Ban: Where Your Money Can’t Go

Title II is where things get real for venture capitalists, private equity firms, and even large corporations with overseas operations. This section prohibits U.S. persons from knowingly making investments in a “covered national security transaction” involving “prohibited technology.” The list of prohibited technology is extensive and highly specific, targeting cutting-edge stuff like advanced integrated circuits (16/14 nanometer nodes or less), extreme ultraviolet lithography components, and high-powered AI models (those trained with at least $10^25$ floating point operations). The government is essentially saying, “You can’t invest in the tech we think is critical to their military.”

Compliance Costs and the $250K Fine

If you violate this investment ban, the penalties are steep: the Secretary can impose a civil penalty up to the greater of $250,000 or twice the amount of the transaction that caused the violation. Imagine a firm that accidentally invests $5 million in a joint venture that later gets flagged for using a prohibited technology; they could face a $10 million fine, plus be forced to sell off (divest) the investment. The compliance burden on U.S. companies to vet every layer of their foreign investments for these highly technical specifications is going to be massive. Furthermore, even if an investment isn't banned, U.S. persons engaging in transactions involving “notifiable technology” must report the deal to the Secretary within 30 days, adding another layer of mandatory paperwork.

Banning Investments in Listed Companies

Title III focuses on stopping U.S. persons from holding stocks or securities in companies placed on the Non-SDN Chinese Military-Industrial Complex Companies List—the list of companies tied to the Chinese military. The President must create rules to enforce this ban, which takes effect 365 days after the law is enacted. This means that if you have a mutual fund, ETF, or brokerage account that holds any of these specific Chinese stocks, you will eventually have to sell them off. This provision forces a significant, mandatory divestment from certain parts of the global market for all U.S. investors, though the sale itself is permitted if it's just to liquidate the banned holding.

Government Gets Special Hiring Privileges

To manage this massive regulatory effort, the bill authorizes $150 million for the Treasury and Commerce Departments over the first two years. But here’s a detail that affects federal hiring standards: the President and agency Secretaries can hire up to 15 people directly into competitive service jobs to carry out the Act, bypassing the standard federal hiring procedures. While the goal is speed, granting special, expedited hiring authority like this always raises questions about transparency and merit in filling sensitive government roles.