Lawmaker Expects Congress Will Compromise on Outbound Investment

The top Democrat on the House Select Committee on China said he believes Congress will be able to overcome its internal disagreements to pass legislation restricting outbound investment in China.

“I think that we’re going to see some kind of compromise,” Rep. Raja Krishnamoorthi of Illinois said at a Feb. 5 Semafor event. “We need to come together on this.”

While the Treasury Department is developing regulations to restrict outbound investment in China’s artificial intelligence, quantum technology and semiconductor sectors (see 2308090066), lawmakers have expressed interest in going further. How they will do that, however, is unclear, as some lawmakers want to cover additional sectors, while others favor placing sanctions on individual entities (see 2401180067).

One potential additional sector is biotechnology, Krishnamoorthi noted. Lawmakers are concerned that Chinese biotechnology companies, such as BGI Group, could misuse genetic information they collect on American citizens.

“We don’t want to be investing in those types of companies in China or otherwise, so that's another area that we need to look at,” he said. “Actually, next week, we’re going to be in Boston for a field hearing on biotech, and I’m sure this topic is going to come up.”

The House Select Committee continues an investigation it announced in August 2023 on U.S. investment firms whose “decisions” led to Americans investing savings in “dozens of blacklisted Chinese companies” (see 2308020024). “What we want to do is finish the investigation, publish our findings, and then go to legislation,” Krishnamoorthi said.

The committee is also still working out the details of a previously disclosed hearing it plans to hold with U.S. chipmakers (see 2401120071). “I think what we want to learn is how are things going in terms of the competition between the U.S. and [China] with regard to chip manufacturing,” the congressman said.

Amid growing U.S. concerns about China, Krishnamoorthi believes the U.S. will reduce, though not eliminate, its economic ties with China. He noted that shortages of active pharmaceutical ingredients and personal protective equipment from China that occurred during the COVID-19 pandemic already have encouraged U.S. industries to create “redundant” supply chains.

“I don’t see [a] decoupling” occurring, he said. “I think it’s going to be diversifying the portfolio. This is happening, and it’s going to continue to happen, and I think that it’s a good thing."

While many of those new suppliers are being created in India and elsewhere in the Asia-Pacific region, Krishnamoorthi would “like to see more of it brought home also,” including in his own congressional district.

Krishnamoorthi also endorsed increased vigilance on Chinese imports. For the Uyghur Forced Labor Prevention Act, which President Joe Biden signed into law in December 2021 (see 2112230021), the congressman said CBP probably needs more resources to enforce the law, including to inspect incoming packages. Policy changes also might be needed, he added.