China Urges US to Halt Expansion of Outbound Investment Curbs

China US investment curbs are the focus of a fresh diplomatic clash after Beijing urged Washington on Saturday to stop expanding restrictions on American investments in China, warning the proposed rule would disrupt trade ties.

China’s commerce ministry said the proposal discriminatorily widened China-related investment restrictions and intensified curbs, according to Reuters. Beijing said it firmly opposed the proposal and reserved the right to take unspecified countermeasures.

The US Treasury Department issued proposals on Thursday to update its outbound-investment security programme, adding biotechnology to restricted sectors and expanding coverage of high-performance computing and hypersonic systems, Reuters reported.

What the draft rule would do

The draft regulation implements the COINS Act, passed by Congress within the National Defense Authorization Act for fiscal year 2026, according to East Asia Brief. It targets equity transactions, joint ventures and greenfield projects exceeding 50,000 dollars, triggering either mandatory notification or outright prohibition depending on technical capability.

Congress originally mandated curbs on five sectors: semiconductors, artificial intelligence, quantum computing, supercomputing and hypersonic systems. Treasury Secretary Scott Bessent exercised statutory authority to add biotechnology, marking the first major expansion beyond digital and hardware supply chains, according to the same report.

Beijing’s response and the wider stakes

Beijing also said the proposal ran counter to the consensus reached by the two countries’ presidents, who have met twice in the past six months, according to Reuters. The US Treasury has said the measures, which do not only cover China, are intended to stop US capital from supporting foreign adversaries’ development of dual-use strategic technologies.

The draft rules designate Russia, North Korea, Iran and Cuba as countries of concern subject to identical capital screening, according to East Asia Brief. The US programme had already restricted certain US investments involving China in semiconductors, quantum technologies and artificial intelligence.

For investors, the practical question is how broadly biotechnology is defined in the final rule, and whether Beijing’s threatened countermeasures materialise. Both answers will shape how much American capital can still flow into one of the world’s largest technology markets.

The dispute now moves into the formal rulemaking process, where investors and industry groups can comment before any final rule takes effect. Until then, American firms with exposure to Chinese biotechnology, computing and hypersonic supply chains face uncertainty over which deals will require notification and which will be barred outright.

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