On October 24, China's Ministry of Commerce formally opposed the U.S. Treasury's proposed expansion of outbound investment restrictions, warning that the measures could damage bilateral economic relations and reserving the right to take countermeasures.
The underlying U.S. proposal was released on October 22 under the Comprehensive Outbound Investment National Security Act, or COINS Act. It would add biotechnology to the sectors subject to restrictions and extend the framework covering certain equity investments, joint ventures, and financing arrangements involving designated countries of concern.
The proposal has not become final law. Treasury is accepting public comments until December 7, 2026. Reuters
Primary source: U.S. Treasury — Proposed Outbound Investment Regulations, October 22
Latest development: Reuters — China's response, October 24
Why it matters strategically
The proposed regulations could alter how American pharmaceutical companies access Chinese biotechnology assets.
The important distinction concerns transaction structure.
Under the proposal, conventional pharmaceutical licensing agreements involving upfront payments, milestones, and royalties generally appear to fall outside the definition of covered investment transactions.
However, equity acquisitions, certain convertible financing arrangements, qualifying joint ventures, and other investment structures may be restricted or prohibited.
This distinction is particularly relevant because several recent U.S.–China pharmaceutical partnerships have combined licensing rights with equity participation.
The proposed rules could therefore affect the economics of cross-border transactions without necessarily preventing the underlying technology from being licensed.
