US President Joe Biden is planning to sign an executive order to limit critical US technology investments in China by mid-August, according to sources familiar with the internal deliberations. The order will focus on semiconductors, artificial intelligence, and quantum computing and aims to curb China’s capabilities in developing next-generation technologies that could dominate national and economic security. The restrictions will not affect existing investments but will prohibit certain transactions, while other deals will require disclosure to the government.

The anticipated executive order, scheduled for the second week of August, has seen several delays before, and there is still a possibility of further postponement. However, discussions have shifted from the substance of the measures to the order’s rollout and accompanying rules, said the sources who spoke on condition of anonymity.

The restrictions will not take effect until next year, and the specific scope will be laid out in a rulemaking process, allowing stakeholders to provide input during the comment period for the final version.

A spokeswoman for the National Security Council declined to comment on the matter.

This move is part of a broader White House effort to limit China’s advancements in crucial technology sectors. However, it has also complicated the already strained relations between the US and China, as Beijing perceives the restrictions as an attempt to contain and isolate the country.

Earlier this month, China’s envoy in Washington warned of retaliation if the US imposes new limits on technology or capital flows, although no specific actions were detailed.

Treasury Secretary Janet Yellen has attempted to assuage Chinese concerns, emphasising that the controls are not intended to broadly affect US investment in China and are narrowly tailored to address specific technology sectors.

National Security Adviser Jake Sullivan first publicly discussed the concept of the executive order in July 2021, and there have been calls from China hawks in the US for tougher and quicker action. Lawmakers from both parties have also shown interest in legislating on the matter, though a bill has not yet reached President Biden’s desk.

In response to the developments, the Senate recently passed an amendment to the national defence policy bill that would require firms to notify the government about certain investments in China and other countries of concern, although US technology investments would not be subject to review or possible prohibition.