Treasury Proposes Expanding US Investment Curbs on Chinese AI, Biotech

The Treasury Department has proposed adding biotechnology to restrictions on American investment in Chinese companies and widening an existing ban on investing in Chinese artificial intelligence businesses.The proposal, announced on Oct. 22, would also extend the China-focused program to Cuba, Iran, North Korea, and Russia.The Treasury Department says the restrictions are intended to prevent American money, business expertise, and connections from helping foreign adversaries develop technologies that could strengthen their military, intelligence, and surveillance capabilities.Some investments would be banned outright. Others could proceed but would have to be reported to the Treasury Department, generally within 30 days of completion. Ordinary purchases of publicly traded stocks and investment funds would generally remain exempt from this program, subject to conditions.The proposal would implement legislation that Congress passed in December 2025 to expand an existing U.S. investment-control program. The proposed changes have not taken effect, and the Treasury Department is accepting public comments through Dec. 7.Broader AI and Tech Investment LimitsThe existing program began in January 2025 under a 2023 presidential executive order, initially targeting certain U.S. investments in Chinese AI, semiconductor, and quantum technology companies.Under the proposal, certain investments in companies in or linked to the targeted countries that develop AI systems would be prohibited, including investments that currently require only reporting to the Treasury Department.In an Oct. 23 email to The Epoch Times, the Treasury Department said the proposed approach would no longer require investors to assess the “technical capabilities or thresholds” of AI systems.The Treasury Department said in the proposed rule that improvements in algorithms and other techniques have made computing-power thresholds increasingly unreliable, while general-purpose AI systems may have national-security applications even when they were not designed for military use.The proposal would also expand restrictions involving advanced computer chips and quantum technologies and broaden controls on high-performance computing and hypersonic systems.It would further strengthen restrictions involving companies linked to the Chinese military. Certain investments that would otherwise require only reporting could become prohibited if the company involved, or an affiliate or subsidiary, appears on specified U.S. government lists.These would include the Pentagon’s list of Chinese military companies and a federal list of biotechnology companies of concern.200 Potential Transactions AnnuallyThe Treasury Department told The Epoch Times that the department estimates about 200 investment transactions annually could fall under the proposed regulations.According to the proposed rule, the Treasury Department examined data on approximately 300 investments by nearly 230 U.S.-based investors over three years, then doubled the annual average to account for potentially missing transactions.The estimate does not mean that all 200 transactions would be prohibited or require reporting.U.S. investors would have to determine whether their transactions fall within the rules. The Treasury Department is considering a public database identifying some companies subject to the restrictions, but has not committed to establishing one.The Treasury Department announced its first civil enforcement penalty under the existing program on Oct. 7: a $200,000 penalty against Amidi LLC, parent company of Plug and Play Tech Center.The Treasury Department said a Chinese investment fund controlled by Amidi invested about $92,500 in Shanghai-based AI and robotics company Noematrix in April 2025 without filing the required notification.The violation concerned failure to report the investment, not a finding that the investment itself was prohibited.Chinese Foreign Ministry spokesperson Mao Ning criticized the proposed expansion on Oct. 23, accusing Washington of using national security to justify discriminatory investment restrictions.Congressional Support and Industry ConcernsThe Treasury Department proposes prohibiting certain U.S. investments involving pharmaceutical compounds, genetic-sequencing equipment, brain-computer interfaces, and technologies used to automate laboratory research.The proposal explicitly includes pharmaceutical compounds such as vaccines, cell and gene therapies, and other medicines. The restrictions would target specified investments involving covered companies, rather than prohibit pharmaceutical development or sales generally.The Treasury Department said advanced biotechnology could contribute to biological-weapons development, military capabilities, surveillance, and threats to American supply chains.The National Security Commission on Emerging Biotechnology, a congressional advisory body, welcomed the proposal.The commission said on Oct. 22 that Washington lacks a sufficiently clear picture of American investment in China’s biotechnology industry and needs to prevent U.S. capital from supporting technologies that could threaten national security.The Biotechnology Innovation Organization, a U.S. industry group, cautioned against overly broad restrictions.“We cannot restrict our way to success,” Biotechnology Innovation Organization President and CEO John F. Crowley said in an Oct. 22 statement.Crowley warned that excessive restrictions could create uncertainty for biotechnology companies and investors, weakening American competitiveness as the United States competes with China.In its response to The Epoch Times, the department said it recognizes that biotechnology investment restrictions could have “countervailing effects on national security” if they lead to significant public-health risks or harm U.S. businesses.The spokesperson said the Treasury Department is particularly interested in public comments addressing those concerns.