On 21 March 2025 US representatives introduced H.R. 2246, the FIGHT China Act, focused on investment by US persons in sensitive Chinese sectors including artificial intelligence, and seeking to restrict the flow of capital through prohibition or mandatory notification.
From technology exports to capital inflows
For a long time the main instrument of US technology restrictions on China has been export control, that is, limiting the flow of technology to China. The FIGHT China Act is concerned with the direction of capital: US capital investing in Chinese AI companies may equally be seen as a channel for technology transfer.
This orientation means the point of pressure shifts from what can be sold to what can be invested in. For an AI company planning to bring in dollar funds, review of the investor’s background is becoming a routine item in the financing process.
Its relationship to existing review mechanisms
Review of foreign investment in the United States is led by CFIUS, while the FIGHT China Act points the other way, at US capital investing abroad (outbound investment). See our notes on foreign investment security review in practice: the two directions have different review logics, one examining foreign capital coming in, the other restricting US capital going out.
The practical effect on AI company financing
First, map the investor’s background. In financing due diligence, the investor’s nationality, place of registration and source of funds become mandatory checks. See the US AI Action Plan for the wider policy setting.
Second, assess how adjustable the equity structure is. Investors who may be restricted are better placed at the appropriate level early on, since adjusting afterwards costs more.
Third, watch the compliance of the exit path. For M&A transactions involving cross-border equity, the review requirements of both the source of investment and the target market need to be assessed together. See the CREATE AI Act and the COPIED Act for how the US legislative calendar is moving on AI.
Whether the bill passes remains uncertain, but the direction of tighter capital review is already clear.
This article is based on the text of US H.R. 2246 and public information and is for reference only; it does not constitute legal advice.