Washington wants to control not just which technologies reach China, but also which American dollars help build them.
The US Treasury Department has proposed tighter restrictions on American investments in sensitive technology sectors in China and other countries considered national security risks, including Russia, Iran and North Korea.
Announced Oct. 22, the proposal implements the Comprehensive Outbound Investment National Security Act, passed by Congress in 2025 as part of the fiscal 2026 National Defense Authorization Act. It expands the existing Outbound Investment Security Program, established under former President Joe Biden in 2023.
The proposed rules cover advanced semiconductors and microelectronics, artificial intelligence systems, quantum computing, high-performance computing, hypersonic systems, and biotechnology. Treasury also uses the term “super intelligence” in its proposed AI-related provisions.
Treasury Secretary Scott Bessent said the rules would prevent adversaries from using American capital to develop technologies that threaten US security while giving investors greater clarity.
The proposal would require reporting for certain investments and prohibit others, depending on the technologies and entities involved. Treasury will accept public comments before issuing final regulations, which will establish the program’s effective date. The US Department of the Treasury published the proposal through its official rulemaking process.
Biotechnology adds a new layer of scrutiny
Biotechnology could prove one of the most contentious additions. The proposal reaches certain gene- and cell-modifying treatments, immunotherapies and brain-computer interface technologies, raising questions about how national security rules will affect drug development and research partnerships.
Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, told the Financial Times that biotechnology was particularly significant because the same innovations can advance medicine while supporting military capabilities or creating supply-chain dependencies.
The Biotechnology Innovation Organization warned that overly broad restrictions could create uncertainty for researchers and investors while weakening US competitiveness.
The proposal may also leave some pharmaceutical licensing arrangements outside its restrictions. According to the Financial Times, cash-based licensing deals that do not involve an equity investment would be exempt, potentially preserving arrangements through which American drugmakers license medicines developed in China.
The distinction matters because licensing intellectual property and acquiring an ownership stake in a company can create different investment and compliance considerations.
Beijing pushes back as investment tensions grow
China has condemned the proposal. Its Ministry of Commerce said the restrictions were discriminatory and ran counter to agreements between the countries’ leaders, adding that Beijing reserved the right to take corresponding measures.
The dispute adds pressure to US-China economic relations despite recent efforts to extend a trade truce. Washington has increasingly treated investment, exports and access to advanced computing as connected national security concerns.
The proposal also creates new compliance challenges for investors. The Associated Press reported that the rules would apply to investments exceeding $50,000 and exclude many financial investments, including stock purchases. The exact scope will depend on the final regulations.
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What companies should prepare for
For US investors, venture capital firms, and technology companies, the proposed rules could complicate investments in Chinese technology businesses. Firms may need stronger screening procedures to determine whether a target company, its activities, or a planned transaction falls within the restrictions.
The requirement to investigate transactions carefully also means companies could face compliance questions even before deciding whether an investment is permitted. Treasury previously fined a US-based company $200,000 for failing to report a subsidiary’s $92,500 investment in a Chinese AI and robotics company, the Associated Press reported.
The biotechnology provisions may be particularly difficult for companies that depend on Chinese partners for early-stage drug research. Clearer rules could reduce uncertainty, but overly expansive definitions could also discourage legitimate collaborations.
Investors may need to reassess exposure to Chinese technology companies, particularly in AI, advanced computing and biotechnology. Businesses could face higher legal costs, longer deal reviews, and fewer options for funding research partnerships.
For ordinary users, the effects are likely to be indirect rather than immediate. Restrictions on investment could influence which technologies receive funding and how quickly new medicines, computing systems or AI products reach the market. However, the proposal does not establish that consumer products or services will be directly restricted.
The central question is how Treasury defines covered technologies and transactions. Rules that are too narrow could leave security risks unaddressed; rules that are too broad could discourage legitimate research and investment. Public comments will help determine where that line falls before the regulations take effect.
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