Trump administration proposes restrictions on US investment in Chinese biotech sector

On October 22, 2026, the U.S. Treasury Department proposed rules under the COINS Act of 2025 restricting American investment in Chinese biotechnology companies. Citing national security concerns involving biological weapons and surveillance, the proposal targets equity deals, joint ventures, and tools spanning gene therapies to brain-computer interfaces, while omitting explicit bans on pharma licensing deals.

Proposed COINS Act rules and scope

• ▪The U.S. Treasury Department proposed adding biotechnology to the COINS Act list of sensitive restricted industries, alongside semiconductors, artificial intelligence, and quantum computing
• ▪On October 22, 2026, the U.S. Treasury Department proposed updated rules for implementing the Comprehensive Outbound Investment National Security (COINS) Act of 2025 to restrict U.S. investment in the Chinese biotechnology sector
• ▪The U.S. Treasury Department's proposed COINS Act regulations would require U.S. investors to notify the government regarding certain biotech transactions in China and prohibit others entirely, subjecting violators to civil penalties and divestment

Treasury rationale for the rules

• ▪The U.S. Treasury Department stated that its proposed biotech rules seek to balance national security protection against potential countervailing public health risks or harm to U.S. commercial competitiveness
• ▪The U.S. Treasury Department cited national security concerns that American investments in Chinese biotech could be used to create biological weapons, develop brain-computer interfaces for surveillance, or cause U.S. supply chain overdependence

Covered technologies and transaction types

• ▪The U.S. Treasury Department's proposed restrictions cover equity interest acquisitions, debt financing, joint ventures, brain-computer interfaces, biomanufacturing equipment, and life sciences tools involving Chinese entities
• ▪The U.S. Treasury Department proposal defines prohibited biotech technologies to include small molecules, polymers, vaccines, blood components, allergenics, cell and gene therapies, and monoclonal antibodies or other recombinant therapeutic proteins

Treatment of IP licensing deals

• ▪While targeting direct equity acquisitions and joint ventures with Chinese biotech firms, the U.S. Treasury Department proposal does not explicitly prohibit intellectual property licensing deals commonly conducted by Western pharmaceutical companies
• ▪Western pharmaceutical companies have invested tens of billions of dollars in Chinese biotechnology companies and licensing agreements to bolster their drug development pipelines
• ▪Raymond James analyst Chris Meekins evaluated the proposed U.S. Treasury rule and stated that intellectual property licensing deals between U.S. pharmaceutical companies and Chinese biotechs will likely remain permissible

Reactions from industry stakeholders

• ▪Biotechnology Innovation Organization CEO John Crowley stated that policies must maintain U.S. biotechnology leadership and warned against an overly broad rule that creates investor uncertainty or weakens American competitiveness
• ▪National Security Commission on Emerging Biotechnology Executive Director Caitlin Frazer called the U.S. Treasury Department's proposal a prudent step toward retaining and regaining American leadership in biotechnology