The U.S. government's latest proposal to tighten outbound investment restrictions on China, extending scrutiny into the fast-growing biotechnology sector, signals a push to curb American capital's involvement in China's emerging industries. But the restrictions could shut U.S. investors out of China's innovation boom and slow global advances in drug development. The U.S. Treasury Department unveiled proposed regulations covering semiconductor technologies and micro-electronics, artificial intelligence (AI), quantum technologies, high-performance computing and supercomputing, and hypersonic systems, with biotechnology added to the list. Under the proposal, certain outbound U.S. investments would be prohibited, while others would require notification. Although the Treasury's announcement did not name China, an accompanying fact sheet identified China, including Hong Kong and Macao, alongside countries including Russia, Iran, and Cuba, among the “countries of concern” covered by the proposed restrictions.
Biotechnology is among the most significant sectors, as technologies shaping the future of drugs and treatments could also enhance China's military capabilities or deepen U.S. reliance on Chinese supply chains. Zhou Mi, Researcher at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times that Washington's widening investment curbs reflect an increasingly aggressive attempt to contain China's emerging sectors. “By cutting off the flow of U.S. technology, capital and talent, Washington seeks to protect its traditional advantages in fields such as biotechnology and prevent China from overtaking it,” he said. But Zhou called the attempt to hold back China's progress "wishful thinking," arguing that restricting investment cannot reverse China's rapid advances in biotechnology, a field where innovation is moving at an accelerating pace.
The proposed rules, issued under the Comprehensive Outbound Investment National Security Act (COINS Act), enacted in December 2025, would update the Treasury's existing Outbound Investment Security Program. The Treasury claimed the restrictions aim to prevent U.S. investment in dual-use strategic technologies from supporting foreign adversaries' military modernization and surveillance capabilities. In biotechnology, the proposal would prohibit investments involving certain technologies and activities, including biological design and sequencing, bio-manufacturing equipment and brain-computer interfaces. The measures are still at the proposal stage, with the Treasury seeking public comments through December 7. Concerns are emerging within the U.S. biotech industry. The Biotechnology Innovation Organization, a leading Washington-based industry lobbying group, warned that an overly broad approach could create uncertainty for innovators and investors and “may unintentionally risk weakening U.S. biotechnology competitiveness,” the Global Times reports.
