U.S. Rep. Mike Gallagher, R-Wis., and chair of the Select Committee on the Chinese Communist Party, urged the Biden administration to enhance investment restrictions on China. Gallagher penned a letter to President Biden, highlighting concerns about national security, according to an Aug. 3 release.
"If American capital continues to flow to Chinese military companies, we are at risk of funding our own destruction," Gallagher said in the release. "Wall Street needs to recognize that investing in critical technology sectors in the PRC endangers our service members, imperils the targets of CCP human rights abuses, and enhances systemic risks for the global economy. That's a deadly cocktail the American people didn't order and don't want to be served."
In his letter, Gallagher highlighted the crucial need for President Joe Biden to address the issue promptly due to the potential national security risks, the release reported. He urged Biden to incorporate comprehensive measures in his executive order including private and public market investments directed toward China.
These measures aim to stop U.S. capital from supporting CCP-linked entities engaged in genocide, uphold shareholder rights by imposing equivalent due diligence standards on Chinese firms and address additional aspects pertaining to national security, according to the release.
Gallagher has consistently championed heightened national security measures. Recently, he collaborated with Illinois Rep. Raja Krishnamoorthi, the ranking member of the Select Committee on the CCP, to stress the necessity of implementing stricter limitations on the export of American equipment, including AI chips, to China, according to a July 28 release.
"As you know, some U.S. investment flowing into the PRC poses a significant national security risk, exposes Americans to material and systemic financial risks, and makes them complicit – often unwittingly – in human rights abuses," Gallagher wrote in his letter to Biden, according to the August release. "Though the exact total is unknown, by one estimate, over $200 billion of U.S. capital is invested in PRC companies through private markets, while over $1.1 trillion of American capital is invested through public markets in PRC stocks and bonds."
Gallagher reported a "sizeable portion" of the investment goes toward PRC technology companies connected to the Chinese military and CCP's "Abhorrent human rights abuses," the release reported.
"Despite these clear risks and the U.S. Government’s longstanding efforts to address national security threats stemming from inbound foreign investment, no mechanism exists for the U.S. Government to require disclosure of, much less restrict, outbound capital flows into such foreign adversary companies," Gallagher said in the letter, according to the August release. "As Congress debates competing approaches – including a so-called “outbound CFIUS” and the imposition of aggressive sanctions against known PRC military companies – I urge you to take meaningful first steps towards effective and balanced outbound investment rules in the interim."
