China Urges US to Halt Proposed Expansion of Investment Curbs on Sensitive Technologies
Beijing says the proposed rules could disrupt normal commercial cooperation, while Washington argues they are needed to protect national security.
China has urged the United States to abandon a proposed expansion of restrictions on American investment in sensitive technologies, adding a new point of tension to the economic relationship between the world's two largest economies.
China's Ministry of Commerce said on Saturday that the proposed US rules would widen restrictions affecting China and interfere with normal commercial cooperation. Beijing said it firmly opposed the proposal and reserved the right to take corresponding measures. The ministry's position was reported by Reuters and outlined in an official Chinese Ministry of Commerce statement.
The US Treasury Department announced the proposed rules on October 22, seeking to expand its outbound investment security programme. The proposed changes would add biotechnology to the sensitive sectors covered and broaden the scope of restrictions involving high-performance computing and hypersonic systems. The measures are intended to prevent US capital and associated expertise from supporting the development of technologies that Washington considers relevant to national security.
The proposal builds on existing US restrictions covering certain investments related to semiconductors, quantum technologies and artificial intelligence. Rather than simply regulating the import or export of technology, outbound investment rules focus on the flow of capital from US investors into businesses developing technologies deemed strategically sensitive in other countries.
Such restrictions can affect a range of commercial relationships, including venture capital, private equity, joint ventures and certain other investment arrangements. Depending on the final wording, companies may need to assess whether a transaction falls within a prohibited category, whether notification is required and whether an exemption applies. The exact impact will depend on the final rules and the specific structure of each transaction.
Washington maintains that the programme is designed to protect national security and is not limited exclusively to China. US officials have argued that investment can provide more than funding: it can also connect companies with technical knowledge, management expertise and commercial networks. From that perspective, restrictions are intended to limit support for technologies that could have military as well as civilian applications.
Beijing sees the proposal differently. China's commerce ministry argues that the measures unfairly expand restrictions on investment involving Chinese companies and risk politicising ordinary commercial activity. It also contends that the proposal conflicts with understandings reached by the two countries' leaders and could harm US businesses seeking access to China's large market.
The dispute highlights the challenge of separating national security concerns from economic integration. China and the United States remain connected through trade, investment and supply chains, even as both governments increasingly treat certain technologies as strategic assets. Companies operating across both markets must navigate changing regulatory requirements while trying to maintain access to customers, investors and research partners.
Biotechnology is particularly significant because it combines scientific research, intellectual property, venture investment and global pharmaceutical development. Restrictions that affect investment in biotech companies could influence how US investors evaluate Chinese drug developers and emerging technology firms. At the same time, the actual effect will depend on the transactions covered by the final rule and any exceptions provided.
The proposal is not yet the same as a fully implemented new restriction. The US Treasury has opened the process for public comment, leaving room for revisions before the rules are finalised. Businesses and investors will therefore need to distinguish between existing legal obligations and proposed changes that could take effect later.
For China-US economic relations, the immediate concern is whether the new measures will create further uncertainty for investors at a time when both sides have incentives to preserve commercial engagement. The proposal does not mean all US investment in China will be prohibited. It does, however, signal that investment screening is likely to remain a central issue in the broader competition over technology and national security.