A draft U.S. Treasury outbound investment rule would sharply limit what U.S. investors can fund and what deals they can structure in much of China’s biotech sector. The proposed regulations would constrain investment categories and potentially limit licensing and joint venture structures tied to drug and biotech assets. While the draft text allows some licensing of Chinese drugs, it seeks to narrow other forms of cross-border collaboration—particularly in areas involving manufacturing and joint ventures. Industry and investors are likely to evaluate deal structures against compliance risk, especially for venture capital and early-stage companies. The policy direction signals continued tightening of investment oversight, increasing friction for cross-border R&D partnerships and requiring more careful legal and regulatory planning for international transactions.