Beijing threatens retaliation and urges Washington to abandon its widened tech-investment rule

China has urged the US Treasury to stop its proposed restrictions on tech investments¹. Beijing said it opposes the expanded US investment restrictions and threatened retaliation³.

China’s challenge targets a US plan to widen its curbs on technology investment². The Treasury has proposed the rule to crack down on investments in China⁴; it covers AI, chip and biotech deals in China and Russia⁵.

The new rule adds the biotechnology industry to the list of sectors the Treasury plans to target under its outbound investment programme, known as OISP¹. The addition has been associated with Treasury Secretary Scott Bessent¹. The measure is a proposed framework for specified transactions².

Why it matters to investors

Adding biotechnology widens the rule beyond AI and chips^1,5. The rule’s reach also extends from China to Russia, so the range of cross-border deals it could touch is wide⁵. US funds and companies with stakes in Chinese biotech deals now face the prospect of new limits on that activity¹.

China’s threat of retaliation raises the stakes³. The reports do not set out what form retaliation would take, but the warning adds a second layer of risk for investors: the US rule itself and whatever measures Beijing adopts in response^2,3.

The rule sits alongside a broader push in Washington to restrict Chinese access to advanced technology. Last week, Pentagon technology chief Emil Michael said that export controls could curb AI labs⁵.

For investors, the combination of outbound investment rules from the Treasury and export controls discussed at the Pentagon points to a policy that is widening rather than narrowing^1,5. Each new sector added to the list expands the range of deals that will need to be screened^1,2.

What to watch

Because the measure is a proposal, the Treasury’s handling of comments and any changes to the final text, particularly on biotechnology, will determine its reach^1,2.

Any concrete retaliatory step announced by Beijing would show how far China is prepared to go in response to the expanded restrictions³.

Further statements from Bessent on the scope of the programme, and from Pentagon officials on export controls for AI, will indicate whether more sectors are likely to be added^1,5.