On October 22, the department proposed rules that would add biotechnology to the list of sensitive sectors where U.S. investors face new limits or outright bans when dealing with China and a handful of other adversaries. The plan also widens existing curbs on artificial intelligence deals and stretches the program to cover Cuba, Iran, North Korea, and Russia.
The proposal implements the Comprehensive Outbound Investment National Security Act that Congress passed in December 2025 as part of the defense bill. That law codified and expanded a program that began under a 2023 executive order and took full effect in January 2025. Under the current setup, certain U.S. investments in Chinese semiconductor, quantum, and AI companies already require notice or face prohibition. The new draft expands that net.
China says it reserves the right to retaliate over a new United States investment plan.
– Treasury wants to add biotech to the sectors where United States money going into Chinese firms is restricted.
– It would also widen the ban on investing in Chinese A.I. companies, and cover four more countries.
– Beijing has not said what its countermeasures would be. So what could they look like?Facts. Not Spin.
Read the full story: https://t.co/kQo2EyvuDH
— Unbiased Headlines (@UnbiasedHdlns) October 24, 2026
Treasury Secretary Scott Bessent said the rules would strengthen the program “to prevent our adversaries from using U.S. investment to develop critical technologies that threaten U.S. national security.” He added that clearer standards would still support an open investment environment for deals that do not cross those lines.
On the biotech side, the draft targets pharmaceutical compounds and their delivery systems—including vaccines, cell and gene therapies, monoclonal antibodies, and related materials—along with brain-computer interfaces, genetic sequencing equipment, biomanufacturing tools, and lab automation technology. Treasury described some of these as carrying an “acute risk” for biological weapons development, military applications, or mass surveillance. Ordinary drug sales or pure licensing of a finished medicine would not automatically trigger the rules; the focus is on equity stakes, certain debt, and joint ventures that transfer capital and know-how into covered companies.
For AI, the proposal drops the old technical thresholds that forced investors to judge computing power or specific capabilities. Improvements in algorithms made those lines unreliable, Treasury said, and general-purpose systems can still carry national-security risks even if they were not built for military use. The draft uses the term “superintelligence systems,” matching language the administration has favored. Some investments that previously needed only a report could become prohibited. Public stock purchases and many fund investments stay largely exempt, and the rules generally kick in above a $50,000 threshold.
Huge win for America: Treasury just issued draft restrictions that crack down on American capital funding our primary enemy. The rules would cut off American investment in the Chinese SI sector and add strong new restrictions to ensure that America, not China, leads the way in advanced biotechnology.
Earlier this year, I urged the administration to take exactly this step. Now let’s make the rules permanent!
https://t.co/vjgQvm7PYk
— Senator Jim Banks (@SenatorBanks) October 22, 2026
Treasury estimates roughly 200 transactions a year could fall under the expanded rules, based on a review of about 300 deals by nearly 230 U.S. investors over three years, adjusted upward for possible gaps. Investors would have to figure out for themselves whether a deal is covered. Comments are open until December 7.
This sits inside a broader Trump administration push that began with the America First Investment Policy memorandum in February 2025. That document directed tighter scrutiny of Chinese-linked capital coming into U.S. critical sectors—technology, infrastructure, healthcare, agriculture, energy—while creating a faster track for allied investors who keep clear distance from Beijing’s military-civil fusion strategy. On the inbound side, the Committee on Foreign Investment in the United States has kept up enforcement pressure; Chinese parties still file a large share of notices, and the administration has used its authority to block or force divestitures in sensitive deals. The outbound rules are the other half of the same idea: stop American capital and expertise from accelerating the rival’s dual-use advances.
Xi Jinping is 73, and China is preparing for a confrontation it cannot afford to lose.
– China recorded a staggering $1.2 trillion trade surplus in 2025. Yet its reported US Treasury holdings have fallen from $1.3 trillion in 2013 to just $591 billion.
– Instead, China has been accumulating physical gold at an extraordinary pace. Official reserves have crossed 2,400 tonnes, with 23 consecutive months of purchases.
– Russia learned the danger of holding wealth within Western financial systems in 2022, when roughly $300 billion of its central-bank assets were frozen. China has been reducing this exposure for years.
– But money is only one vulnerability. China depends heavily on imported petroleum, much of it paid through banks connected to SWIFT and shipped by sea, exposing it to financial sanctions and maritime supply disruptions during a confrontation.
– So China has accumulated oil inventories approaching 1.5 billion barrels, worth over $100 billion at $70 per barrel. It has also maintained deep energy relationships with Russia and Iran for obvious reasons.
– And China is reducing the oil its economy needs in the first place. Over 50,000 kilometres of high-speed railway now connect its cities, while electric vehicles already displace roughly one million barrels of daily oil demand.
– Behind this transition sits an enormous industrial ecosystem. China has invested in overseas mineral supplies, dominates critical-mineral refining, and manufactures much of the world’s batteries and electric vehicles.
– The same industrial depth extends into steel, electricity, electronics and shipbuilding. China produces roughly half the world’s steel and accounts for more than half of global commercial shipbuilding output.
– And this is increasingly translating into military capacity. Annual J-20 fighter production has grown from around 20 in 2020 to an estimated 120, alongside the expansion of the world’s largest navy by vessel count.
China is systematically reducing the financial, energy and industrial vulnerabilities that the United States and its partners NATO could exploit in a major war.
My reading is that these preparations point towards Taiwan.
China has never abandoned its ambition to bring the island under its control, including by force. And when it eventually makes that move, it will want the capacity to withstand the sanctions, disruption and industrial demands that follow.
The timing remains unknown. But the preparations are already visible and in the final stages.
— Ammanichanda (@Arkasiraee) October 23, 2026
Enforcement is already real. On October 7, Treasury announced its first civil penalty under the existing program: $200,000 against Amidi LLC, parent of Plug and Play Tech Center. A Chinese fund controlled by Amidi put about $92,500 into Shanghai-based Noematrix, an AI and robotics firm, in April 2025 without the required notification. Treasury found the deal through its own monitoring. The violation was the missed filing, not a finding that the investment itself was banned. Bessent tied the action to protecting technological leadership under the America First approach.
Beijing pushed back. Chinese Foreign Ministry spokesperson Mao Ning said on October 23 that overstretching national security to impose discriminatory restrictions on normal business “serves no one’s interests.”
U.S. industry is split. The Biotechnology Innovation Organization’s president, John F. Crowley, warned that “we cannot restrict our way to success.” He argued that overly broad limits could create uncertainty and hurt American competitiveness while China keeps advancing. Western drugmakers have poured tens of billions into Chinese biotech for new candidates; roughly a third of drugs in global development now originate in Chinese labs. Pharma executives have lobbied to protect most pure licensing deals. At the same time, China hawks in Congress, including House Select Committee on the Chinese Communist Party Chairman John Moolenaar, had already pressed Treasury to treat biotech as a prohibited sector, citing the flood of capital and know-how into Beijing’s push for dominance by 2030.
China’s holdings of US Treasuries just fell to $590.7 billion, the lowest since 2008
Beijing cut another $27.3 billion in August alone, per new US Treasury TIC data
China is now down 55% from its $1.32 trillion peak in November 2013
Japan, still the largest holder, cut $35.6 billion to $1.068 trillion, its lowest since December 2024
Meanwhile the UK climbed to $1.01 trillion and now sits just $58.8 billion behind Japan for the top spot
Total foreign holdings still rose $83 billion to $9.33 trillion, the 6th-highest on record, led by Canada adding $38 billion
The buyers of US debt are quietly changing. China and Japan are stepping back while London, Canada and offshore financial centers fill the gap, and with deficits running hot, who keeps showing up at Treasury auctions matters more than ever for yields
— StockMarket.News (@_Investinq) October 21, 2026
On X, the reaction tracked the same divide. One post with a short lab video put it plainly: “America’s money should not be building China’s next biotech advantage… Trump is finally drawing the line: U.S. capital defends America first, or it doesn’t go.” Others noted that the draft would ban most private investment in Chinese firms developing any “SI system,” potentially sweeping in software, robotics, and drones, while the biotech addition sets up a lobbying fight before the final rule.
The proposal does not take effect yet. After the comment period, Treasury will issue a final version. Dual-use technologies that can strengthen a rival’s military, intelligence, or surveillance tools have been the consistent target across both the inbound and outbound sides of the policy. Whatfinger News has been tracking the broader contest over advanced military and dual-use systems at militarywar.whatfinger.com. The next few months will show how tightly the final rules close the door on American capital heading into those Chinese sectors. —
The Whatfinger News Team: Ben and Beth, with Grok on edits
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