The U.S. House of Representatives approved a $900 billion defense authorization bill on Wednesday, a decisive step toward sweeping restrictions on U.S. investments in China’s technology and defense sectors.
Despite the move to restrict investments in companies in China, the administration of President Donald Trump also this week cleared Nvidia Corp. to sell advanced chips to Chinese customers under strict new revenue-sharing terms.
The bill, which passed the House by a margin of 312 to 112, codifies many of Trump’s national security priorities while reinforcing congressional oversight of the Pentagon. Among its most consequential technology-related provisions is the inclusion of the Comprehensive Outbound Investment National Security Act, legislation designed to curb U.S. capital flowing into China’s military and strategic industries.
The investment screening measure builds upon the Department of the Treasury’s January rule enforcing a prior executive order that restricts outbound investments in countries like China that pose “sensitive technology threats.” The legislation formalizes a framework requiring U.S. investors to notify regulators of any transactions involving sectors critical to China’s military, intelligence and surveillance capabilities. It also empowers the Treasury to expand restrictions beyond semiconductors and quantum computing, potentially encompassing artificial intelligence and advanced manufacturing.
“The NDAA language codifies the existing Treasury rule issued in January 2025, but with a few more teeth,” H.K. Park, who leads the outbound investment screening practice at Crumpton Global, recently told CIO. “It also empowers the Treasury to investigate transactions where investors failed to notify authorities.”
The legislation would pertain to equity and debt investments, including passive or index-based investments, as well as joint ventures, private equity and venture capital funds.
The measure reflects Washington’s intensifying effort to decouple key segments of the U.S. economy from China’s industrial rise—even as exceptions reveal the continuing complexity of the relationship.
The U.S. government recently granted Nvidia permission to resume limited sales of its high-performance AI chips to Chinese firms. Under the arrangement, Nvidia must remit 25% of its China-derived revenue to the U.S. Treasury. The bill includes a “national interest exemption” that authorizes the secretary of defense to exempt from the bill’s bans “any activity determined by the President … to be in the national interest of the United States.”
Beyond the China investment provisions, the defense bill authorizes a 3.8% pay raise for U.S. troops, allocates $400 million in annual security aid for Ukraine and injects billions into defense technology modernization. It also mandates Pentagon reforms in weapons procurement and oversight—areas that could impact federal information technology contractors and defense systems integrators.
The legislation must still clear the Senate, where it is expected to pass overwhelmingly, and be signed by Trump.