Two House lawmakers have introduced a series of bipartisan bills they say will mitigate the strategic, commercial and national security threats posed by China to the American economy and financial markets.
Rep. Brad Sherman, D-Calif., ranking member of the House Financial Services Subcommittee on Capital Markets, and Rep. Victoria Spartz, R-Ind., on March 20 announced four China-related investment bills:
- The No Capital Gains Allowance for American Adversaries Act would eliminate the capital gains tax break for investments in companies based in China, Russia, Belarus, Iran and North Korea.
- The No China in Index Funds Act would bar stocks of Chinese companies from index funds.
- The China Risk Reporting Act would require publicly traded companies that file any reports with the Securities and Exchange Commission to disclose in their annual reports: (1) the degree to which the company is dependent upon China and the risks China poses, such as supply chain disruptions, intellectual property theft or nationalization of assets, and (2) the steps the company has taken to reduce its China risk.
The bill is aimed at forcing companies competing for capital to reduce their exposure to China. “If China invades Taiwan, Congress should be able to impose sanctions, knowing American companies have insulated themselves from the rupture,” the lawmakers wrote in a news release. “Hopefully, this will deter such an invasion.”
The PRC Military and Human Rights Capital Markets Sanctions Act, the fourth bill, would prohibit Americans from investing in the stock of companies that appear on human rights sanctions lists or have an affiliate on the sanctions list.
“Congress has a duty to the American people to protect their hard-earned money from foreign adversaries like China by demanding transparency and eliminating perverse incentives," Spartz said in the news release.
Chris Iacovella, president & CEO of the American Securities Association welcomed the bills in a statement. Stopping the Chinese Communist Party “from accessing the American capital it needs to fund its aggression is necessary to secure America’s economic and national security,” he said. “We look forward to helping Representatives Spartz and Sherman turn these commonsense bipartisan policies into law.”