Rep. Andy Barr (R-Ky.) has introduced a bill requiring companies listed on the U.S. stock exchanges to disclose if they have ties to the Chinese Communist Party (CCP).
“CCP investment in American companies frequently leads to CCP manipulation of American companies and investors—whether it be the forced transfer of technology or the outright theft of American intellectual property.”
Listed Chinese companies are not subject to U.S. auditing. Beijing doesn’t allow the Securities and Exchange Commission or U.S. regulators to examine their records, claiming that their books are “state secrets” that can’t be shared with outside parties.
The bill, named the Transparency in Chinese Government Investment Act of 2020 (H.R.7924), would amend the Securities Exchange Act of 1934 to require publicly traded companies to disclose any financial support they receive from the CCP, such as subsidies, grants, loans, loan guarantees, tax breaks, tax incentives, or any preferential treatment related to state procurement policies, according to the press release.
One of the longstanding U.S. demands in ongoing trade talks is that Beijing end its massive government subsidies granted to Chinese companies, which U.S. companies say make it difficult for them to compete in the Chinese market on a level playing field.
Beijing subsidizes Chinese companies, in particular those deemed “state champions,” to achieve its economic goals, such as promoting the country’s technological development or industrial competitiveness.
The bill requires that companies reveal whether any of their officers or directors who hold or previously held positions are or were part of the CCP, the Chinese government, or have other “Chinese affiliations,” according to the press release.
If enacted, the bill would also require companies to disclose any connection with China’s strategic initiatives, such as “Made in China 2025” or the “New Generation Artificial Intelligence Development Plan.”
In 2017, China rolled out the “New Generation Artificial Intelligence Development,” a roadmap that set out strategic goals by 2020, 2025, and 2030 to achieve major breakthroughs in AI theories such as big data intelligence and human-machine hybrid intelligence. Ultimately, the plan is to turn China into an AI innovation powerhouse by 2030.
The bill would expose “Chinese companies raising capital in American markets that are part of broader CCP strategic initiatives that undermine American national security and further some of the CCP’s most dangerous activities,” Barr said.