House Republicans To Introduce Bill Banning Investments In China-Linked Foreign Defense Companies

Three Republican lawmakers in the House of Representatives are planning to unveil new legislation aimed at curbing United States investment into Chinese military-linked defense companies later this week, Reuters reported Monday.

What Happened

The bill, prepared by Wisconsin Representative Mike Gallagher, Indiana Representative Jim Banks and California Representative Doug LaMalfa, will require Treasury Secretary Steven T. Mnuchin to prepare a report on the foreign defense companies which have ties to the Chinese militaries, according to Reuters.

All U.S. corporates and citizens will be required to divest their investments in companies that are listed in the Treasury report, and the U.S. entities will also be banned from making any new investments in the companies, the bill says, as per Reuters.

"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," Banks said in a statement, Reuters reported.

"We need to end our cognitive dissonance and stop funding the rise of our chief global adversary."

Why It Matters

It's not immediately clear if the bill will receive bipartisan support. Both Democratic and Republican lawmakers have found common footing against China in the past, including the passage of the Hong Kong Human Rights and Democracy Act late last year.

The relations between the U.S. and China have soured further following the spat over the origin of the novel coronavirus (COVID-19), which has killed more than 372,000 people worldwide, according to Johns Hopkins University data.

The latest attempts by China to bring a national security law in the semi-autonomous city of Hong Kong have also flared up tensions between the world's two largest economies.