China Tells US to Drop Wider Tech-Investment Curbs as Treasury Adds Biotech
The US Treasury Department on Thursday, Oct. 22, issued a proposed rule updating its outbound-investment security programme to implement the Comprehensive Outbound Investment National Security Act passed by Congress. The draft adds biotechnology as a restricted sector for the first time and widens coverage of high-performance computing, supercomputing, hypersonic systems, quantum information technologies and artificial intelligence, which Treasury refers to as "superintelligence."
China's commerce ministry responded on Saturday, Oct. 24, urging Washington to stop expanding curbs on American investment in China. In its statement, the ministry called the proposal discriminatory, saying it widened China-related investment restrictions and would disrupt trade ties. Beijing also told Washington to stop overstretching the concept of national security.
Biotechnology is the headline addition: the earlier programme focused on semiconductors, quantum technologies and AI. The draft also spells out hypersonic coverage in finer technical detail, including systems flying at five times the speed of sound, plus propulsion, enabling technologies, materials and test facilities. In other words, the proposal updates the existing outbound-investment security programme, extending restricted sectors from semiconductors, quantum technologies and artificial intelligence to biotechnology. Sensors, control equipment and software usable in hypersonic systems would fall under notification duties.
The proposal would apply only to transactions exceeding $50,000 and would exclude many financial investments, including stock purchases. It targets covered transactions involving "countries of concern," named as China (including Hong Kong and Macau), Cuba, Iran, North Korea and Russia. Venezuela has been dropped from the list now that former president Nicolas Maduro is no longer in power.
Public comments close on Dec. 7, with final regulations due by March 2027. Washington says the programme keeps US capital and know-how from feeding rivals' military and intelligence capabilities; Beijing warns bilateral economic ties will suffer. US investors with technology exposure in China now face months of limbo, and the dispute adds a fresh irritant to the trade relationship heading into the new year. For companies, the practical question is what counts as a covered transaction: the $50,000 threshold and the carve-out for many financial investments, including stock purchases, set the boundaries, while the notification duties for hypersonics-related sensors, control equipment and software add a compliance layer short of an outright ban.