Legislative Push to Curb U.S. Investment in China Heats Up

The U.S. House committee on China, chaired by Republican John Moolenaar, is prioritizing legislation to limit U.S. investments in Chinese firms. This effort aims to prevent funding entities that allegedly support genocide and military threats. Earlier measures were blocked, but new executive orders and potential regulations are being discussed.

The Republican chair of the House of Representatives' select committee on China emphasized on Wednesday that the panel's main focus is on legislating restrictions on U.S. investments in China to halt funding that could lead to 'our own demise.'

'We need an outbound investment regime that prohibits investments in businesses listed for supporting the Chinese military or genocide,' said Representative John Moolenaar during a panel discussion at the American Enterprise Institute. 'That's our top priority at the moment,' he stressed. 'We are essentially funding our own downfall.'

A committee spokesperson clarified that 'genocide' pertains to China's alleged treatment of its Uighur minority in Xinjiang. The Chinese Embassy in Washington has yet to respond to these allegations. This move indicates that Congress may reintroduce restrictions on U.S. investments in China despite previous legislative attempts being thwarted.

In 2022, a measure to limit outbound investment was excluded from the Chips Act. President Joe Biden's executive order in August 2023 delegated the Treasury Department the authority to restrict U.S. investments in Chinese entities, covering sectors like semiconductors, quantum technologies, and specific AI systems. However, the proposed rules, first presented in July, are still pending finalization. The Treasury Department has not commented on this matter.

Moolenaar mentioned that House Speaker Mike Johnson aims to have concrete proposals by the year's end. Johnson's office has not provided any comments. The U.S. and its allies have sanctioned Chinese officials over human rights abuses in Xinjiang, declared as genocide by Washington.

China denies these allegations and claims its camps in Xinjiang are vocational centers aimed at fighting extremism. Moolenaar also pointed out specific Chinese companies posing national security threats, notably Shanghai Zhenhua Heavy Industry Co (ZPMC), a major player in the ship-to-shore crane market in U.S. ports.

He stated that ZPMC cranes, which dominate 80% of the U.S. port market, have unauthorized cellular modems posing cybersecurity risks. According to him, ZPMC could jeopardize U.S. maritime operations if directed by the Chinese government, especially in a conflict over Taiwan. ZPMC has previously denied posing any cybersecurity threat. Neither ZPMC nor the Chinese Embassy have commented on this claim.

(With inputs from agencies.)