Sunday, May 19, 2024

House committee targets crackdown on U.S. investment in Chinese tech, military development

WASHINGTON — Members of a bipartisan House committee examining economic competition between the U.S. and China said Tuesday that Congress needs to legislate barriers for American investment in Chinese companies, including artificial intelligence.

“It is up to Congress to ensure American money isn’t financing the CCP’s top tech ambitions, including AI, quantum computing, and semiconductors, but also biotechnologies, directed energy, hypersonics, advanced manufacturing, space technologies … anything associated with the PRC’s military-industrial complex,” said Rep. Mike Gallagher, chairman of the House Select Committee on the Chinese Communist Party.

Gallagher, R-Wisc., said during the hearing that American companies continuing to invest in blacklisted Chinese firms are helping to fund the Chinese government’s push to invade Taiwan.

Government employee pension funds are also at play. Rep. Raja Krishnamoorthi, D-Ill., ranking member of the committee, cited a May Newsweek report stating that at least 115 mutual funds offered under the federal government’s Thrift Savings Plan contain one or more of 30 sanctioned or watch-listed Chinese companies that threaten national security.

“By investing in these companies we risk supporting the CCP’s military aggression and their human rights abuses,” Krishnamoorthi said.

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“If the Chinese Communist Party moves on Taiwan, it would lead to a catastrophic war, a global depression and tens of thousands of lives being lost on all sides,” Krishnamoorthi told CNBC’s “Squawk Box” on Tuesday. “That’s something we have to prevent.”

But Gallagher said that Wall Street firms have not seriously considered the threats posed by the People’s Republic of China, including risks to the U.S. economy, if the PRC prepares to invade its neighbor.

“What is Wall Street doing to guard against that outcome?” Gallagher said at the hearing Tuesday. “Are banks and asset managers moving to protect American investors? Or are they just betting on another bailout?”

At least one Wall Street firm, JPMorgan Chase, is concerned about strained relations with China, according to CEO Jamie Dimon.

“I don’t expect a war in Taiwan, but this can go south,” Dimon said Monday at a financial conference in New York. Prospects for JPMorgan operations in China are looking less optimistic amid uncertainties in IPO and merger markets, he added.

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