U.S. Sen. Marco Rubio (R-FL) is working to drum up support in the U.S. Senate for his bill that aims to prohibit American investment in Chinese companies that pose a threat to national security.
The American Financial Markets Integrity and Security Act, S.570, would prohibit investment vehicles of all types, including mutual funds, venture capital, private equity, ERISA plans and trusts, and others, from investing in Chinese companies listed on the Section 1237 Communist Chinese military companies list and the Commerce Department’s Entity List.
“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 in a Dec. 21 letter to his Senate colleagues. “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 [People’s Republic of China].”
Rubio said that American investment in Chinese companies has surged. A recent report from the U.S.-China Economic and Security Review Commission revealed that U.S. holdings of Chinese equity and debt securities have risen by 57.5 percent to $1.2 trillion since 2017. Rubio added that the amount is likely even higher than that, as flows through offshore investment vehicles and private equity are unreported.
“Ideally, this problem is a problem that market conditions would address on their own. Investors have plenty of reasons to stay out of China. The ultimate control of the CCP over economic activity and the opacity of the PRC economy pose fundamental barriers to well-functioning markets,” Rubio wrote.
He invited Senate colleagues to cosponsor S.570 and support his efforts to mitigate this “increasingly pressing risk” to national security.