The Need for Legislation to Restrict American Investment in Chinese Companies

The increasing economic competition between the United States and China has sparked concerns about American investments in Chinese companies, particularly in areas such as artificial intelligence (AI). A bipartisan House committee, the House Select Committee on the Chinese Communist Party, has called for legislation to establish barriers for American investment in China across various sectors, including AI and other advanced technologies. This article examines the committee’s recommendations and the potential risks associated with American investments in Chinese companies.

The committee argues that it is crucial for Congress to ensure that American money does not finance China’s top technological ambitions, which encompass not only AI but also quantum computing, semiconductors, biotechnologies, directed energy, hypersonics, advanced manufacturing, and space technologies. These sectors are considered part of China’s military-industrial complex, raising concerns about the potential use of American investments to fund the Chinese government’s military aggression.

Furthermore, the committee highlights the involvement of government employee pension funds in investing in Chinese companies. A Newsweek report revealed that at least 115 mutual funds offered under the federal government’s Thrift Savings Plan contained Chinese companies that were either sanctioned or watch-listed due to threats they pose to national security. By investing in these companies, there is a risk of indirectly supporting the Chinese Communist Party’s military aggression and human rights abuses.

Members of the committee, such as Rep. Raja Krishnamoorthi, emphasize the need to prevent a potential conflict with China regarding Taiwan. Krishnamoorthi warns that if the Chinese Communist Party were to move on Taiwan, it would lead to a catastrophic war, a global depression, and significant loss of lives. This underscores the urgent need to address the risks associated with American investments in Chinese companies, as such investments could inadvertently contribute to a dangerous escalation of tensions.

The committee has called into question the seriousness with which Wall Street firms have considered the threats posed by the People’s Republic of China. Rep. Mike Gallagher asks whether banks and asset managers are actively taking steps to protect American investors or if they are merely relying on the possibility of another bailout.

Notably, JPMorgan Chase CEO Jamie Dimon has expressed concerns about strained relations with China. He acknowledges that while he does not expect a war in Taiwan, the situation could potentially deteriorate. This caution from a major Wall Street firm indicates that even financial institutions are recognizing the risks associated with doing business in China.

In light of these risks and concerns, the bipartisan House committee strongly advocates for legislative measures to restrict American investment in Chinese companies. Such legislation would provide a framework to safeguard American investments and prevent them from inadvertently contributing to China’s military aggression or human rights abuses.

The legislation would specifically target investments in sectors associated with China’s military-industrial complex, including AI, quantum computing, semiconductors, biotechnologies, directed energy, hypersonics, advanced manufacturing, and space technologies. By establishing barriers, Congress can ensure that American money does not contribute to the advancement of China’s technological capabilities that could be used for hostile purposes.

The bipartisan House committee’s recommendations highlight the urgent need for legislation to restrict American investment in Chinese companies, particularly in sectors like AI and advanced technologies. The risks associated with these investments, including enabling China’s military aggression and human rights abuses, underscore the importance of proactive measures to protect American interests. Furthermore, the concerns expressed by Wall Street firms and the potential impact on the U.S. economy further emphasize the need for action. It is now up to Congress to act decisively and provide the necessary legislative framework to ensure that American investments do not inadvertently contribute to the advancement of China’s military-industrial complex.