US Plans to Make Tougher Laws for Companies Investing or Ties to China’s Military

In an attempt to curb US funding for Chinese companies, a group of Republican lawmakers revealed plans to introduce a bill this week that would make difficult for the companies to invest in companies with ties to China’s military. With the relationship between Washington and Beijing getting sour recently due to some political issues including China’s intervention in Hong Kong, it was likely that Democrats would support the call for tougher policies on China.

Tougher Rules for US Companies and Investors

According to a document seen by Reuters, Republican representatives namely Mike Gallagher, Jim Banks, and Doug LaMalfa would introduce the bill, which would require Treasury Secretary Steve Mnuchin to submit a report to Congress. The bill aimed to impose restrictions on American investors towards companies that have “substantial contracts with, ties to, or support from” the Chinese military. After the approval of the bill, in six months American companies and citizens would be required to divest from those firms and would be banned from making new investments in them.

An official of a bank said in a statement, “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,” adding that “We need to end our cognitive dissonance and stop funding the rise of our chief global adversary.”

Recently, the US government under the Trump administration has caught a new war on trade and technologies with Beijing, which also linked with security issues of the country and the ties between the two largest economies have soured over the widespread coronavirus outbreak.

Democrats are Likely to Support the Call

Analysts expected that Democrats would support the bill since anti-China sentiment was currently running high in the Capitol after China moved to curb Hong Kong’s independence. Both the Democratically-led House of Representatives and the Republican-controlled Senate had earlier approved legislation to punish top Chinese officials for human rights abuses against Uighur Muslims.

Earlier this month, an independent board administering federal worker and military pension funds had inquired Chinese companies under pressure from the White House. The Senate also passed legislation that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.

On Friday, President Donald Trump said his administration would be focusing to safeguard American investors from the risks of investing in Chinese companies and warned the investors to comply with US accounting and disclosure rules. The Trump administration clarified that the investors in Chinese companies were at risk because of the difference in auditing and disclosure rules between the US and China.

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

You can reach out to me at: [email protected]

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