The Commerce Department this morning issued AI export controls aimed at ensuring China does not gain access to U.S. tech through third countries, Maria reports.

Why it matters: The Export Control Framework for AI Diffusion is the Biden administration's final swing at China's AI industry.

• The new regulation is meant to keep AI from fueling Beijing's military development, administration officials say.

What's inside: The rule will create a new global licensing system for the most advanced AI technology exports.

• Companies can continue to export to 20 allied nations freely. But they'll face some restrictions for non-allied countries and will be prohibited entirely from exporting to U.S. adversaries.
• Supply-chain activities are excluded, so chips can move where they need to be packaged or tested.
• Chip orders worth roughly 1,700 advanced GPUs total do not require a license and do not count against national chip caps. That allows for the vast amount of orders being placed, including by universities, medical institutions, and research organizations.
• To build data centers around the world, companies from the U.S. and certain partner countries will have an opportunity to only obtain a single authorization from Commerce's Bureau of Industry and Security.

Winners: China hawks on the Hill pushed the Biden administration to impose clear redlines in the name of national security and winning the tech race.

Losers: NVIDIA, Oracle and industry groups say the rules will undermine American competitiveness and hinder innovation.

Threat level: A senior administration official said U.S. models are 6 to 18 months ahead of China's right now and "every minute counts."

• If the controls were to be frozen by the incoming administration, China would significantly stockpile U.S. hardware and try to set up remote compute facilities in third countries, the official said in a call with reporters.

What they're saying: Senate Commerce Committee Chair Ted Cruz said the rules are a Biden administration effort "to try and jam President Trump" and will "crush American semiconductor leadership."

• Brad Carson, president of policy advocacy group Americans for Responsible Innovation, lauded the rules as "national security 101."
• Groups like ARI want to take export controls even further to account for open-source models.

What we're watching: The Trump administration will need to weigh its protectionist approach with the desire to beat China.

• Commerce is giving companies a year to come into compliance with the rules, with a 120-day comment period that Secretary Gina Raimondo said will give the next administration an opportunity to gather input.
• "I fully expect the next administration may make changes as a result of that input," Raimondo said on a call with reporters on Sunday.