January 28, 2021 —The Washington Post
Thankfully, a growing bipartisan consensus has emerged that recognizes we must address the clear risk to U.S. economic and national security this poses. Congress and the Trump administration made considerable progress over the past four years in laying a marker that future U.S. policy must correct profound imbalances in the U.S.-China relationship.
The foremost policy choice facing President Biden is whether his administration will continue those efforts in ending this exploitation or return to the naive consensus that allowed China’s rise at America’s expense.
A number of Chinese companies and their subsidiaries that operate in U.S. capital markets actively support the Communist Party’s programs to supplant the United States. Such companies benefit from Beijing’s espionage and human rights abuses, as well as government programs such as the “military-civil fusion strategy” and “Made in China 2025” industrial policy. As a result, Americans are investing in Chinese companies that bankrupt American competitors and build weapons that may be used against U.S. service members.
President Donald Trump took several actions to ban such companies from our markets. He also signed bipartisan legislation to protect American retail investors and retirees from risky investments in fraudulent, opaque Chinese companies listed on U.S. exchanges and that trade on over-the-counter markets but do not comply with our transparency laws.
I urge Biden to build upon — not undo — the critical work the previous administration took to address China’s exploitation of U.S. capital markets.
For starters, Biden should keep or improve Trump’s executive order to prohibit U.S. investments in Chinese firms on the Defense Department list of Communist Chinese military companies. The decision of whether to side with American workers, service members and mom-and-pop investors or Beijing and payouts for Wall Street investment bankers should be easy.
Leaving the executive order in place would make Biden the second president in history to convey to the CCP that it will no longer be able to exploit our financial system. It would also put Wall Street on notice — campaign donations do not buy a free pass to sell out U.S. workers and industry.
Wall Street became “too big to fail” after the financial crisis. Now, its firms are signaling to Beijing that if China can steer enough American investment into CCP-affiliated companies — which Wall Street would gladly facilitate — the U.S. government will view these Chinese companies as “too big to sanction.”
Where the Trump administration erred, Biden’s administration should correct course.
One glaring example is the financial services section of the so-called Phase 1 agreement then-Treasury secretary Steven Mnuchin negotiated with China. Instead of holding the Chinese Communist Party accountable for exploiting U.S. investors and our markets and addressing Wall Street’s role as the facilitator, the agreement ensures U.S. capital will continue to directly fund China’s state-run economy. For the first time ever, American financial companies are authorized to purchase Chinese nonperforming loans, the overwhelming majority of which go to state-owned enterprises controlled by the CCP.
In other words, China can finance its industrial ambitions with the deepest, most liquid capital markets in the world — our own.
In Congress, we must continue our bipartisan efforts to stop China’s exploitation of U.S. finance. I will soon be reintroducing my American Financial Markets Integrity and Security Act, which would ban malicious Chinese companies from operating in U.S. capital markets.
Opponents of this effort argue these companies will flee to foreign exchanges abroad, a move that would be bad for America’s economy and our investors. But these opponents fail to explain how the current status quo is good for America at all. I will never support allowing American investors to put their hard-earned money into opaque, Chinese Communist Party-controlled companies that flout U.S. investor protections laws, extend the CCP’s reach globally and corrode democratic governance.
The United States cannot afford to keep supporting the CCP and its state-led economic model, whether inadvertently or deliberately, through misguided economic and financial policies. It is high time that we realigned our economic activities with our national interests and political values.
Biden will have to make many tough choices. But when it comes to China’s exploitation of U.S. capital markets, the choice facing him is simple: support American workers and our national security, or side with Wall Street and the CCP.