As the year starts to wind down, U.S. Sen. Marco Rubio, R-Fla., called for Congress to pass his “American Financial Markets Integrity and Security Act,” a bill which “would prohibit malign Chinese companies — including the parent, subsidiary, affiliate, or a controlling entity — that are listed on the U.S. Department of Commerce Entity List or the U.S. Department of Defense list of Communist Chinese military companies from accessing U.S. capital markets.”
Rubio brought back the bill in March with U.S. Sen. Rick Scott’s, R-Fla., support. Other backers include Republican U.S. Sens. Mike Braun of Indiana, Tom Cotton of Arkansas, John Kennedy of Louisiana and Ben Sasse of Nebraska.
“Currently, there are a number of Chinese companies, including over thirty identified on lists released in June and August 2020 by the Pentagon, accessing U.S. capital markets. This includes those companies that have been sanctioned by the U.S. government but are operating in the U.S. capital market system and are involved in the Communist Party’s military, espionage, human rights abuses, ‘Military-Civil Fusion Strategy,’ and the ‘Made in China 2025’ industrial policy,” Rubio’s office noted.
“The Chinese Communist Party’s exploitation of U.S. capital markets is a clear and ongoing risk to U.S. economic and national security that must be addressed,” Rubio said when he introduced it. “The American Financial Markets Integrity and Security Act will ban these companies from operating in U.S. capital markets and make clear to the Chinese Communist Party that they will no longer be able to exploit our financial system. I urge the Biden administration to support this bill and build upon — not undo — the critical work the previous administration took to address China’s exploitation of U.S. capital markets.”
“The Chinese Communist Party, led by General Secretary Xi, is committing a genocide against the Uyghurs, taking away the basic rights of Hong Kongers and threatening Taiwan,” Scott said. “Everything a business does in Communist China is shared directly with a government that is jailing its people for their religious beliefs, refuses to respect human rights and is building up their industrial and military strength in an effort to dominate the world. I’m proud to join the American Financial Markets Integrity and Security Act to make sure entities with ties to the Chinese Communist Party don’t have access to American capital.”
The bill was sent to the U.S. Senate Finance Committee where it has been for nine months.
Rubio tried to spur the Senate into action last week, sending a letter on his proposal to every one of his colleagues.
“American investment in Chinese companies has surged, even as the Chinese Communist Party (CCP) has turned increasingly authoritarian and reckless on the global stage,” Rubio wrote. “According to the 2021 Annual Report to Congress of the U.S.-China Economic and Security Review Commission, U.S. holdings of Chinese equity and debt securities have risen by 57.5 percent since 2017, to $1.2 trillion total. Unreported flows through offshore investment vehicles and private equity mean this amount is likely significantly higher. Major Wall Street banks have in recent months announced the approval of large wealth management products focused on investing in the PRC.
“For the above reasons, I believe it is necessary that Congress act to restrict financial investment in the PRC,” Rubio continued. “Our bill, the American Financial Markets Integrity and Security Act (S.570), would prohibit investment vehicles of all types—mutual funds, venture capital, private equity, ERISA plans and trusts, among others—from investing in Chinese companies listed on the Section 1237 Communist Chinese military companies list and the Commerce Department’s Entity List.”
Over in the U.S. House, U.S. Rep. Mike Gallagher, R-Wisc., is championing the companion bill.
“The Chinese Communist Party’s campaign to dominate the technologies of the future poses an existential threat to our values, and underscores the need for the United States to selectively decouple its economy from China’s,” Gallagher said when he introduced the bill. “One step towards beginning this process is through preventing malign Chinese actors from exploiting our capital markets to finance their efforts. This legislation takes important steps to not only highlight ties between Chinese firms and the People’s Liberation Army, but also ensure that no American unwittingly subsidizes the Party’s efforts to undermine our values.”
The American Securities Association is backing the proposal.
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