The Decoupling America's Artificial Intelligence Capabilities from China Act (AI Decoupling Act for short) was proposed by U.S. Senator Josh Hawley on January 29, 2025. [1] At present, the bill is in the initial stage of congressional review during the proposal stage. Due to the controversial nature of the bill, which involves multiple fields such as punishment and finance, there is still significant uncertainty about whether it can become formal legislation in the future. Nevertheless, the bill reflects the long-term stance of the US government on its policy towards China in the field of AI. Therefore, its potential impact and the series of chain reactions it may trigger still need to be taken seriously.

1、 Legislative purpose

The bill aims to cut off cooperation and technological exchanges between the United States and China in the field of artificial intelligence (AI), prevent the flow of American AI technology, talent, and capital to China, and maintain America's national security and technological competitive advantage.

2、 Core Content

Prohibit the two-way flow of AI technology and intellectual property (including chips, algorithms, hardware, etc.) between China and the United States.

US institutions or individuals are prohibited from conducting AI research and development within China or collaborating with Chinese entities. Violators face a maximum fine of $1 million or 20 years in prison.

Thoroughly cut off US investment in China's AI industry, including secondary market transactions.

Restricting the exchange of AI talents and strengthening the scrutiny of Chinese researchers in the United States.

The bill also includes open source AI technology in the broad regulatory scope, which may end the free collaboration of the global open source community.

3、 The Impact of the AI Decoupling Act on Chinese Enterprises

Although the introduction of the AI Decoupling Act has received support from some American politicians and interest groups, attempting to restrict exchanges and cooperation between China and the United States in the field of artificial intelligence through legislative means, the likelihood of the bill being officially implemented in the short term is low, for the following reasons:

1. The United States has already implemented strict export controls on China, and new measures will only become stricter

The United States has implemented strict export controls on Chinese companies in the past few years, especially in key technology fields such as artificial intelligence, semiconductors, and quantum computing. Chinese companies such as Huawei and ZTE have deeply felt the impact of the US technology blockade. For example, the United States has banned the provision of high-end chips and operating systems to Huawei, which greatly affects Huawei's smartphone business and forces it to accelerate the development of alternative technologies. In this context, the 2025 American Artificial Intelligence Capability and China Decoupling Act may further increase the technology blockade on Chinese enterprises, but because the existing export controls are already quite strict, the new act may be a continuation or refinement of existing policies, rather than introducing new major changes. Therefore, the difficulties faced by Chinese enterprises are not much different from existing policies, and the impact may be incremental rather than qualitative breakthroughs.

2. The decoupling bill involves criminal law and has significant difficulties in becoming formal legislation

The measures involved in the decoupling bill are not only restrictions on commercial transactions, but also stricter criminal legal constraints, involving the protection of basic rights such as personal freedom and property protection in the constitution. If these measures are to be implemented at the executive level, they may conflict with the US Constitution, especially in terms of the individual freedoms and property rights guaranteed by the Constitution. The legal system in the United States places great emphasis on protecting the basic rights of individuals and businesses, and any provisions involving criminal responsibility may face legal challenges. Therefore, the decoupling bill may encounter significant legal obstacles during its passage and implementation, making it difficult to become formal legislation, and ultimately may not be fully implemented or achieve the expected results. Even if the bill is ultimately passed after significant revisions, the breadth and depth of its actual implementation may be limited.

3. Many high-tech companies in the United States oppose it

Many high-tech companies in the United States, such as Microsoft and Nvidia, oppose the decoupling bill mainly for two reasons: firstly, China is the world's second largest economy and technology market, and American high-tech companies have a large number of customers and businesses in consumer electronics, software, cloud computing and other fields in China, relying on sales revenue in the Chinese market. If the decoupling bill is passed, companies such as Apple, Intel, Google may lose Chinese customers, affect global sales and market share, and increase compliance costs. In addition, the US scientific and technological innovation ecosystem relies on global cooperation and transnational talent flow. The essence of the globalization of the scientific and technological industry determines that innovation needs close cooperation. The decoupling act will destroy the atmosphere of cooperation and affect the global competitiveness of American enterprises. In addition, excessive nationalism and technological isolation will make it difficult for American enterprises to access global innovation opportunities, resulting in stagnation of technology research and development and market development. This potential impact makes the US scientific and technological industry strongly opposed, and the actual implementation of the decoupling act faces greater opposition pressure. [2]

In summary, the impact of the AI Decoupling Act on Chinese companies is somewhat limited compared to existing US policies. Firstly, the strictness of export controls has reached a certain level, and the new bill is more of a reinforcement of existing policies rather than introducing new crackdowns. Secondly, due to the protection of individual freedom and property in the constitution, the bill faces high legal challenges and implementation difficulties in becoming formal legislation. Finally, strong opposition from domestic high-tech companies in the United States, especially based on market influence and global cooperation considerations, may constrain the implementation of the bill. Therefore, although the bill may increase pressure on Chinese companies, its actual impact will not exceed the framework of existing policies, and the possible impact is relatively limited.

4、 How can Chinese companies break through the technological blockade imposed by the United States?

Although the possibility of the AI Decoupling Act becoming formal legislation in the short term is small, the bill reflects Washington's long-term stance on AI policy towards China. For example, shortly after the bill was announced, on February 21, 2025, US President Trump signed a National Security Presidential Memorandum called the America First Investment Policy, which explicitly instructed the Committee on Foreign Investment in the United States (CFIUS) to strengthen investment reviews from China in key areas such as semiconductors, artificial intelligence, quantum technology, biotechnology, aerospace, etc., with the aim of protecting US national security while restricting foreign adversaries (especially China) from accessing critical technologies and assets of the United States. [3]

Faced with the technological blockade imposed by the United States, the Chinese government and enterprises need to actively seek new partners and markets, and leverage resources and opportunities from other countries and regions in order to break through the restrictions of the US blockade. Specific strategies can include the following aspects:

（1） Policy level

1. Attract high-tech companies in the United States that oppose the decoupling bill to invest or expand their investments in Shanghai

Many high-tech companies in the United States are opposed to the decoupling bill, mainly because it may lead to them losing the Chinese market, increasing compliance costs, and undermining the global nature of technology cooperation. Therefore, China can strengthen cooperation with these American high-tech enterprises to attract them to transfer their research and development centers, production bases, and other projects to China, especially in cities with technological innovation and industrial agglomeration such as Shanghai, Jiangsu, and Hangzhou. By providing policy incentives, tax reductions, financial support and other attractive measures, these enterprises can enhance their investment confidence in the Chinese market and to some extent promote their continued innovation cooperation in China. The government can attract these enterprises to carry out deeper research and development cooperation in China through investment promotion policies, and promote the complementarity between multinational corporations' technology research and development in China and local enterprises.

In addition, through cooperation with such enterprises, Chinese companies can not only acquire advanced technology and management experience, but also occupy a more important position in the global supply chain. This cooperation can help Chinese companies better cope with the US blockade measures, promote independent innovation in technology, and enhance global competitiveness.

2. Improve relevant legislation on intellectual property in the field of AI

In the context of increasingly fierce global technological competition, intellectual property protection is the key to sustainable development of enterprises. China's development in the field of AI should not only focus on technological innovation, but also attach great importance to intellectual property protection. On the one hand, enterprises should strengthen the application and protection of their own intellectual property rights, establish a sound intellectual property management system, and ensure that innovative achievements are fully protected. On the other hand, at the policy level, intellectual property legislation in the field of AI should be continuously improved, and efforts should be made to crack down on infringement and create a favorable innovation ecosystem. By legislating to clarify the intellectual property ownership of AI technology, regulating the legal boundaries of data usage and algorithm innovation, and providing solid legal protection for the technological innovation of enterprises.

3. Strengthen technical cooperation with governments in non US regions

In the face of the US technology blockade in the field of AI, China needs to actively expand international cooperation, leverage resources and opportunities from other countries and regions, and break through the blockade restrictions. The government should strengthen cooperation with non American countries and promote multilateral technological exchanges and resource sharing. China can actively participate in multilateral mechanisms such as the United Nations, promote the establishment of a global governance framework for artificial intelligence, reach consensus on key issues such as ethics, data governance, and algorithm transparency, and avoid individual countries monopolizing technical standards. At the same time, China should promote the popularization and capacity building of AI technology, promote open sharing of technology, talent, and infrastructure through international technology sharing platforms, and narrow the global digital divide. In addition, Chinese AI companies can accelerate their global layout, expand overseas markets, and promote cooperation in the application of AI in fields such as healthcare, education, and resource development. For example, the Chinese open-source model DeepSeek has shown great potential in multiple fields overseas. Through these measures, China can not only break through the technological blockade, but also contribute wisdom to the global development of AI and promote the construction of a fair and open international scientific and technological cooperation pattern.

（2） At the enterprise level

1. Strengthen the research and innovation of domestic core technologies

The technology blockade by the United States highlights the risk of Chinese companies relying on foreign countries for critical core technologies. Therefore, Chinese enterprises must increase their investment in independent research and development and enhance their ability to independently control core technologies. On the one hand, we should focus on key areas such as semiconductors, artificial intelligence chips, and high-end software to accelerate the process of domestic substitution. For example, through industry university research cooperation, universities, research institutions, and enterprises can jointly overcome technological challenges, accelerate the research and application of domestically produced AI chips, operating systems, and industrial software. On the other hand, enterprises should strengthen the construction of their internal R&D system, cultivate high-quality technical teams, enhance their independent innovation capabilities, and fundamentally reduce their dependence on foreign technology.

2. Strengthen technological cooperation with non American regions such as Europe and Canada

Compared with the blockade imposed by the United States, countries and regions such as Europe and Canada have relatively relaxed technology blockades against China in the field of AI technology. Many research institutes, universities, and technology companies in Europe do not reject cooperation with China, especially in academic exchanges and research projects. In fact, the EU provides a considerable number of public funding quotas every year to support young scholars and scientists from China to visit and work in Europe. This provides opportunities for Chinese enterprises to engage in technical cooperation and talent exchange with high-level research institutions in Europe.

Chinese companies can strengthen their scientific research and technological cooperation with Europe by actively participating in these collaborative projects, especially in the fields of artificial intelligence, data science, and the Internet of Things. Cooperation with European countries, especially technological powerhouses such as Belgium, Germany, and the Netherlands, can help Chinese companies acquire advanced AI technology and innovative achievements, filling the technological gap with the United States. In addition, by re establishing communication and cooperation in the fields of technology and academia, strengthening technical exchanges and cooperation between both sides, Chinese enterprises can make greater progress in AI technology research and development, standard setting, and other areas. Strengthening cooperation with Europe can also help Chinese companies gain an advantage in global technological competition.

3. Expand emerging markets and build a diversified market structure

The technology blockade imposed by the United States not only restricts technological exchanges, but also has a profound impact on the global market landscape. Chinese enterprises should seize this opportunity, actively expand into emerging markets, and reduce their dependence on traditional markets. For example, through the "the Belt and Road" initiative, strengthen cooperation with countries along the Belt and Road in digital economy, smart cities and other fields, and promote the international application of Chinese technology and standards. At the same time, we focus on the needs of emerging markets such as Southeast Asia, Africa, and South America, and combine local resources and policy advantages to provide customized technological solutions to support local economic development. By building a diversified market structure, Chinese companies can not only diversify market risks, but also occupy a more advantageous position in the global market.

In summary, in the face of the technological blockade imposed by the United States, policy measures can be taken to attract American high-tech enterprises to invest in China or expand their investments, strengthen cooperation with these enterprises, and obtain technical support and market resources. Secondly, improve the intellectual property protection system, respect intellectual property rights in the field of AI, promote relevant legislation, and provide legal protection for enterprise innovation. In addition, after the Russo Ukrainian War, if policies permit, Chinese companies can actively participate in the reconstruction process of Ukraine, not only learning new technologies, but also opening up new channels for international cooperation for Chinese companies.

At the same time, Chinese enterprises should adopt multidimensional strategies to break through limitations and achieve sustainable development. Firstly, by strengthening the research and innovation of domestic core technologies, reducing dependence on external technologies, and enhancing independent and controllable capabilities; Secondly, enterprises can strengthen technological cooperation with non American regions such as Europe and Canada, leverage their scientific research resources and open attitude, bridge the technological gap, and enhance international competitiveness; Finally, actively expanding into emerging markets, building a diversified market structure, reducing dependence on traditional markets, diversifying risks, and exploring new growth opportunities. These strategies not only help companies break through blockades, but also promote China to occupy a more advantageous position in global technological competition and achieve high-quality development.

References and comments (slide down to view)

[1]Decoupling America’s Artificial Intelligence Capabilities from China Act:  https://www.congress.gov/bill/119th-congress/senate-bill/321/text/is?overview=closed&format=xml  

[2]Microsoft Urges Trump to Overhaul Curbs on AI Chip Exports:  https://www.wsj.com/tech/microsoft-urges-trump-to-overhaul-curbs-on-ai-chip-exports-4dc48e81  

[3] https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-encourages-foreign-investment-while-protecting-national-security/