China calls on US to drop proposed expansion of outbound investment restrictions

China’s Ministry of Commerce on October 24 urged the United States to abandon proposed rules expanding restrictions on American investments in sensitive technologies, warning that the measures could damage bilateral economic ties and disrupt global commerce.

The US Treasury Department issued proposals on Thursday to update its outbound investment security programme under the Comprehensive Outbound Investment National Security (COINS) Act, expanding restrictions to cover biotechnology, high-performance computing, supercomputing and hypersonic systems.

The existing framework already restricts certain US investments involving China in semiconductors, quantum technologies and artificial intelligence.

The proposed rules also expand the list of countries of concern to include Russia, Cuba, Iran and North Korea, broadening the programme beyond its existing China-focused restrictions.

According to Reuters, Beijing criticized the proposal as a discriminatory expansion of investment restrictions, arguing that it overstretches the concept of national security and undermines normal international economic cooperation.

The ministry said the measures contradicted the consensus reached by the two countries’ presidents and warned that China reserved the right to take countermeasures.

The dispute comes amid continued tensions between Washington and Beijing over technology, trade and national security. 

China’s commerce ministry said the proposed restrictions risked undermining bilateral economic ties, despite recent engagement between the countries’ leaders, who have met twice in the past six months.

Washington maintains that the programme is intended to prevent American capital and expertise from supporting the development of strategic, dual-use technologies by foreign adversaries, particularly those that could strengthen their military and intelligence capabilities.

The proposed rules remain open for public comment as US authorities work towards finalising the programme’s scope and implementation.