Last week, a group of Republican lawmakers stated that they plan to present a bill that would ban investments in Chinese companies with significant ties to the Chinese military. Representatives Mike Gallagher (R-WI), Jim Banks (R-IN), and Doug LaMalfa (R-CA) will unveil the bill, which would require Treasury Secretary Steve Mnuchin to submit a list to Congress of foreign defense companies with close ties with the Chinese military. According to Reuters, six months after the bill is passed, American firms and citizens will be forced to divest from those companies and banned from making further investments in those companies. The move comes amid a rise in tensions between the U.S. and China over numerous issues including the origins of coronavirus and Hong Kong.
In a statement, Rep. Banks said, “On one hand, Congress is asking taxpayers to help grow our military so we can compete with China. On the other hand, large U.S. investment funds are dumping U.S. dollars into China’s military industrial base. We need to end our cognitive dissonance and stop funding the rise of our chief global adversary.” According to VOA, earlier, President Trump added 33 companies to the United States’ economic blacklist of Chinese companies with ties to China’s military. The Commerce Department explained the banning of these companies, claiming that they are “complicit in human rights violations and abuses committed in China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uighurs, ethnic Kazakhs, and other members of Muslim minority groups in the Xinjiang Uighur Autonomous Region.” In response, Chinese Foreign Ministry spokesman Zhao Lijian said, “We urge the United States to correct its mistakes, withdraw the relevant decisions, and stop interfering in China’s internal affairs. China will continue to take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises and safeguard national sovereignty, security and development interests.”
VOA notes that the economic blacklist and the proposed bill are two of the ways in which the Trump Administration is trying to punish Chinese companies for funding alleged human rights violations. Some companies added to the blacklist include prominent AI and cybersecurity firms that the U.S. claims played a role in the oppression of Uyghurs and Muslims. MarketWatch notes that the U.S. took similar action last year, adding nine Chinese companies to the list out of concern that the U.S. was losing its technological dominance, especially in AI.
According to the South China Morning Post, tensions between the U.S. and China are very high. The article notes that China recently drafted a national security law that could affect Hong Kong’s autonomy from China. In a recent speech, President Trump announced that the U.S. would no longer recognize Hong Kong as being autonomous from China, meaning trade through Hong Kong is now subject to the same tariffs as goods entering and exiting China. The New York Times notes that this move could harm U.S. and Hong Kong businesses. On May 28th, Congress passed the Uyghur Human Rights Policy Act, which Time notes would place sanctions on officials and organizations responsible for the alleged persecution of Uyghurs in China. The ongoing trade war between the U.S. and China adds to current tensions.
The recent bill is one of many moves the U.S. is taking against China for numerous reasons. Tensions between the two nations are high, and the New York Times notes that business in both countries could suffer. The death of George Floyd only adds to the hectic state of U.S. domestic and international affairs. Both nations will have to wait to see how recent moves could affect markets and businesses.