How Many PRC Issuers Could Be Affected by Expanded AFIP Outbound Investment Restrictions?

The Treasury Department’s outbound investment rule that went into effect in January 2025 restricts certain types of non-passive investment by US persons in three critical technology sectors: semiconductors, artificial intelligence (AI), and quantum. On February 21, 2025, the Trump administration issued the America First Investment Policy (AFIP) memo, which indicates that US outbound investment restrictions could be extended to include passive US investment in PRC securities. Moreover, the memo proposes expanding the restricted technology sectors to include biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and “other areas implicated by the PRC’s national Military-Civil Fusion strategy.”

To gauge the potential impact of the proposed expanded restrictions on US outbound investment to the PRC, we used existing MPER technology tags and additional keyword matching against regulatory disclosures and other publicly available corporate information to estimate how many of the 5,396 A-share security issuers are developing technologies that are outlined in the AFIP memo. We focused on six major technologies (semiconductors, AI, quantum, biotechnology, aerospace, and advanced manufacturing) and excluded hypersonics and directed energy because of their military nature and limited exposure to publicly listed companies and the vaguely defined category of “other areas implicated by the PRC’s national Military-Civil Fusion strategy.”