A group of Republican lawmakers have reintroduced a bill to require public pension plans and endowments to divest their investments in Chinese companies or lose their tax-exempt status.
The Dump Investments in Troublesome Communist Holdings Act, or DITCH Act, defines disqualified Chinese companies as any company incorporated or based in China or is directly or indirectly owned by a Chinese entity, including through a derivative instrument or other contractual arrangements.
The bill was reintroduced in the House and Senate Tuesday by Rep. Mike Gallagher, R-Wis., chairman of the House Select Committee on the Chinese Communist Party; Sen. Josh Hawley, R-Mo.; Rep. John Moolenaar, R-Mich.; Rep. Rob Wittman, R-Va.; and Rep. Darin LaHood, R-Ill.
"American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party," Mr. Gallagher said in a news release. "Universities, non-profits, public pension funds and other institutions that want preferential tax treatment must choose: are they committed to their professed values or to financing a genocidal communist regime?"
The DITCH Act would allow the Treasury secretary to grant a waiver to certain non-profit entities if their need to hold certain Chinese assets outweighs the national security risk. In that case, entities granted a waiver would have to submit regular reports, while the Treasury secretary would have to make public the waiver's reasoning. The secretary would also have to publish a report within 360 days, and then annually, describing the patterns of outbound investment into China generally, including a sectoral breakdown, according to the news release.
Messrs. Gallagher and Hawley introduced the DITCH Act in December during the previous congressional session. The bill did not move then and without bipartisan support is unlikely to move this session.
On Monday, Mr. Gallagher's committee sent letters to BlackRock and MSCI, alerting the companies that they're being investigated for facilitating "massive flows of American capital" into Chinese companies that have been blacklisted by the U.S. government.