New House Bill Seeks More Information on US Investment in China

Two House members introduced a bill July 25 that would require certain American public companies and investment firms to report how much business they do in China.

Rep. John Moolenaar, R-Mich., chairman of the House Select Committee on China, and Rep. Blaine Luetkemeyer, R-Mo., who chairs the House Financial Services Subcommittee on National Security, Illicit Finance and International Financial Institutions, said their legislation would help increase understanding of U.S. dependence on China.

“Wall Street and American companies are deeply entangled with China, so a military confrontation with the [People’s Republic of China] would be devastating to those firms -- and to American investors,” Moolenaar said. "All Americans have a right to understand that material risk.”

The proposed PRC Risk Transparency Act would require public companies with “meaningful exposure” to China to disclose the percentage of their revenue, profit, capital investment and supply chain that is tied to China. The companies also would have to disclose their relationships with the Chinese Communist Party and with companies the U.S. government has deemed as national security threats or human rights violators. They also would have to assess how they would be affected if U.S.-China trade falls by 80% due to “Chinese military aggression.”

The bill also would require investment firms to disclose their holdings in and exposure to certain Chinese securities.

The legislation, which was referred to the House Financial Services Committee, was introduced as the Treasury Department works on regulations to prohibit certain U.S. outbound investment in three Chinese technology sectors (see 2406210034).