One investment of $92,478 is what the Treasury Department holds up as proof that its rules on American money going abroad are not decorative. A U.S. company’s Chinese subsidiary put that sum into Shanghai Qiongche Intelligent Technology, also known as Noematrix, a firm working on embodied AI and robotics, meaning software that controls machines in the physical world. The parent company failed to report it, and Treasury fined it $200,000, more than double the value of the deal. It was the first civil penalty under the Outbound Investment Security Program, and the target was Amidi, LLC.
On Thursday Treasury proposed a rule to widen that program sharply. It would crack down on U.S. high-tech investments in China, Russia, North Korea and other countries of concern, in areas such as supercomputing and artificial intelligence, so that American capital does not strengthen adversaries’ militaries.
What the proposal covers
The rule would extend the restrictions to hypersonic systems, which can travel at five times the speed of sound, as well as supercomputing, biotechnology and AI. Treasury used President Donald Trump’s favored term for AI, “superintelligence,” or SI. It would apply only to investments above $50,000 and would exclude many financial investments, including stock purchases. Cuba, Iran, North Korea and Russia now sit on the list alongside China. Russia’s inclusion arrives days after Trump waived sanctions on Russia following a diesel deal with President Vladimir Putin.
The foundation is the Outbound Investment Security Program, in force since January 2, 2025. It grew from Executive Order 14105, signed by then-President Joe Biden on August 9, 2023, and it originally focused on semiconductors, quantum technologies and AI in specific Chinese entities. It works in two tiers: some deals are prohibited outright, and others must be reported to Treasury. In December 2025, Congress passed the Comprehensive Outbound Investment National Security Act, the COINS Act, to codify and expand it. The law adds sectors such as high-performance computing and hypersonic systems and brings in more countries. It also sets a March 2027 deadline for new rules.
Why the Amidi case matters
The Noematrix deal shows how investments move indirectly: the money passed through a Chinese subsidiary rather than leaving an American entity directly. A robotics or software startup can still end up inside the program’s definitions, and AI is a sprawling category. For venture firms, private equity funds and corporations with overseas subsidiaries, the new country list adds a layer, since many compliance processes were built around China alone.
The proposal also lands in the middle of the long tech rivalry between the world’s two biggest economies. China has restricted exports of rare earth minerals, the United States has restricted advanced computer chips, and both have imposed tariffs. Trump and Chinese President Xi Jinping agreed last year to ease tensions during talks, a truce they extended last month into January.
Treasury will take public comments before issuing a final rule, and the framework could still change. Treasury has said it plans to release proposed regulations tied to the COINS Act within weeks. Which additional countries it names, and how precisely it defines covered activity in AI and semiconductors, will decide how far the rules reach.
Sources
- US Treasury proposes a rule to crack down on high-tech investments in China, other adversaries
- US Treasury proposes a rule to crack down on high-tech investments in China, other adversaries
- US Treasury proposes rules to block American investments in AI and semiconductors
Photo: Laura Ockel / Unsplash (Unsplash License)
