The long-awaited order has been justified as a way of protecting US national security by preventing US capital and expertise from supporting the military modernisation of China, The New York Times first reported.

The measure will largely affect private equity and venture capital firms, as well as joint ventures with Chinese groups. 

The order is focused on three main investment areas: semiconductors and microelectronics, quantum information technologies and certain AI systems. In addition to prohibiting specific investments, the policy will also require firms to notify the government regarding investments in high-tech sectors. 

In a briefing with reporters, senior administration officials said the measure was a “national security action, not an economic one”, stressing that the US remained committed to open investment.

The Treasury said it anticipates exempting “certain transactions, including potentially those in publicly traded instruments and intracompany...