The United States is moving to broaden its restrictions on investment in China. In a notice of proposed rulemaking (NPRM) released by the U.S. Department of the Treasury, biotechnology has been added to the scope of outbound investment restrictions, alongside semiconductors, AI, quantum information technologies, high-performance computing and hypersonic systems. The public comment period is due December 7, 2026.

The move marks further expansion of Washington's efforts to curb China's technological development, extending beyond export controls and entity-list restrictions to cross-border capital flows, and now reaching into the life sciences, a field closely tied to human health.

Washington continues to justify the expansion on "national security" grounds. Bringing cutting-edge fields such as biological sequencing, biomanufacturing, laboratory automation, brain-computer interfaces and bioinformatics tools under scrutiny, the proposed rule treats certain biotechnology activities as potential "dual-use" technologies. It assumes that U.S. capital flowing into relevant Chinese companies could translate into strategic advantages for China, and seeks to erect a financial firewall to prevent that outcome.

Every country has a legitimate right to protect its national security, but restrictions must be grounded in demonstrable risks. If broad claims alone can justify the continual expansion of restricted technologies and industries, the question is whether such measures genuinely safeguard security or simply use security as a pretext to shut out competition.

Biotechnology and biopharmaceuticals have an inherently global dimension; as global public goods, they deliver wide benefits. Drug discovery, infectious disease prevention and control, treatments for rare diseases, and breakthroughs in basic life sciences are endeavors no country can pursue in isolation. Cross-border flows of capital, laboratory expertise and clinical research resources have been important drivers of pharmaceutical innovation over recent decades.

The Chinese and U.S. biopharmaceutical industries are deeply interconnected. China has developed extensive active pharmaceutical ingredient supply chains, large-scale clinical research capabilities and cost-efficient R&D systems. U.S. pharmaceutical companies and venture capital firms hold substantial portfolios of drug targets and patents and have established commercialization channels. Licensing agreements and joint research and development projects have helped bring treatments to patients worldwide. If the proposed restrictions take effect, they risk disrupting this interconnected innovation chain.

This is precisely why U.S. industry itself has voiced its opposition. The Biotechnology Innovation Organization and other institutions warned that an overly broad approach could create uncertainty for innovators and investors and risk weakening U.S. biotechnology competitiveness. Consumer advocacy groups worry that obstructing cross-border R&D capital will delay new drug launches and raise drug costs, with American patients ultimately bearing the price.

Michael Becker, director of health policy at the American Action Forum, said the biotechnology provisions in the proposed rule “offer little justification for treating ordinary pharmaceutical development as a prohibited technology.”

Even if Washington succeeds in restricting capital flows, will that necessarily deliver the technological advantage it seeks? The Information Technology and Innovation Foundation argued in an October 2025 report that sanctions often hurt U.S. competitiveness more. Technological competition depends on innovation capacity, industrial foundations, and talent accumulation — conditions that administrative restrictions cannot substitute for. The U.S. would be better off strengthening its own industrial competitiveness rather than ignoring the laws of competition and hoping to preserve advantage by restricting investment.

China has expressed serious concern and firm opposition to the proposed rules. A Ministry of Commerce spokesperson called the measures a "discriminatory expansion that politicizes economic ties and undermines global trade order."

Science knows no borders, and the mission of the life sciences is to protect human health. Countries should allow knowledge, capital, and clinical resources to flow more smoothly, rather than drawing lines by nationality and erecting barriers to cooperation.

Attempts to build walls through capital controls and block other countries' technological development will ultimately damage one's own innovation ecosystem, curtail market opportunities, and raise the institutional costs of global scientific and technological cooperation. Promoting innovation through openness and enhancing well-being through cooperation is the right path for the life sciences. It is also the rationality and vision that major powers should not lose in competition.