On Thursday, U.S. Reps. John Moolenaar (R-MI) and Blaine Luetkemeyer (R-MO) introduced legislation that would ensure transparency into U.S. investment in and reliance on China.
The legislation, the PRC Risk Transparency Act, will require public companies to disclose what percentage of their revenue, profit, capital investment and supply chain is tied to China. The legislation will also require companies disclose relationships with the Chinese Communist Party and with companies the U.S. government has identified as a national security threat or human rights violator.
“Our Select Committee’s investigations have shown that Wall Street and American companies are deeply entangled with China, so a military confrontation with the PRC would be devastating to those firms – and to American investors,” Moolenaar said. “All Americans have a right to understand that material risk. I am proud to support the PRC Risk Transparency Act to give investors and lawmakers the information they need to understand the systemic risks posed by investing capital in our foremost adversary.”
The bill would also require companies to assess what a geopolitical conflict with China would mean for their business. The legislation mandates that the companies run a market access loss scenario that describes a situation where U.S.-China trade falls by 80 percent due to Chinese military aggression, leading to sanctions and asset seizures on both sides. And lastly, the legislation directs investment firms to disclose holdings and exposure when it comes to certain Chinese securities.
“The geopolitical tensions between the United States and the People’s Republic of China (PRC) pose significant risks to American investors and our financial markets. The PRC Risk Transparency Act is critical in arming our investors with the necessary material information to make informed decisions and protect their financial interests,” Luetkemeyer said. “This is a proactive step in fortifying our economy against the risks posed by the PRC and ensures the long-term stability of our financial markets as we navigate increased Chinese aggression towards the United States and our allies.”