The US Treasury proposed draft regulations that would sharply limit what kinds of drug and biotech assets US companies and venture capitalists can invest in or transact for across much of China’s biotech sector. The proposal, described as broad in scope, would affect deal structures and investment strategies by placing tighter boundaries on permissible targets. The draft adds another layer to the compliance landscape for cross-border biotech funding and partnerships. Market participants are likely to focus on how the rules define covered asset classes and what exceptions apply, particularly for strategic collaborations and minority stakes. For biotech dealmakers, the announcement signals a higher compliance burden and could slow transactions tied to China exposure even where scientific collaboration is otherwise feasible.