U.S. Senators Marco Rubio (R-FL) and Mike Braun (R-IN) have introduced a bill that would ban Chinese companies blacklisted by Washington from accessing U.S. capital markets. The bill, if passed, would affect a number of blacklisted Chinese companies, including Hikvision, China Telecom and China Mobile.
The American Financial Markets Integrity and Security Act, introduced late Monday by Republican Senator Marco Rubio of Florida and Republican Senator John Braun of Indiana, would ban U.S. investment firms, pension funds and other Chinese companies from entering the U.S. capital markets. Insurance companies that take equity stakes in Chinese companies listed by the U.S. Department of Commerce as entities or by the U.S. Department of Defense as companies supported by the Chinese military, including parent, subsidiary, affiliate, or controlled entities of those companies.
Under the bill, blacklisted Chinese companies would also be barred from trading on U.S. exchanges after a one-year grace period.
“The Chinese Communist Party’s use of the U.S. capital markets is a clear and continuing risk to the U.S. economy and national security that must be addressed,” Senator Rubio said in a statement. “Currently, many Chinese companies operating in the U.S. capital markets are actively involved in the Communist Party’s military, espionage, human rights abuses, ‘military-civilian integration strategy’ and ‘Made in China 2025’ industrial policy. “
After listing 20 prominent Chinese companies, including Huawei, Hikvision, China Mobile and China Telecom, as companies owned or controlled by the Chinese military in June, the Pentagon designated 11 Chinese companies as military enterprises of the Communist Party in August, including China Donghong Satellite Corporation, Sinochem Corporation and China National Nuclear Engineering Construction Corporation.
More Chinese companies were added to the Commerce Department’s list of entities, including telecommunications giant Huawei and 38 of its affiliated entities, 33 Chinese entities involved in human rights abuses and military procurement in Xinjiang, and 24 Chinese companies involved in island reclamation and militarization of artificial reefs in the South China Sea.
The proposal comes at a time when Congress and the Trump administration are applying increasing pressure to crack down on Chinese companies that are perceived to be affiliated with the Chinese Communist Party government or to have engaged in misconduct. These Chinese companies are accused of gaining the support of U.S. investors while failing to comply with U.S. competition rules.
In August, officials from the U.S. Securities and Exchange Commission (SEC) and the U.S. Treasury Department urged President Trump to delist Chinese companies that trade on U.S. exchanges but fail to meet his audit requirements by January 2022. The Senate unanimously passed legislation in May that could block certain Chinese companies from listing on U.S. exchanges unless they follow U.S. auditing and regulatory standards.
Last November, Rubio and a number of other senators introduced a bill that would prohibit federal pension funds from investing in Chinese companies.
According to the U.S.-China Economic and Security Review Commission (USCC), which was established by the U.S. Congress, 156 Chinese companies, including 11 state-owned enterprises, are listed on the three major U.S. exchanges, with a combined market value of $1.2 trillion.
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