CPA sent the following letter to House Speaker Nancy Pelosi (D-CA) to include a provision in the Senate-passed U.S. Innovation and Competition Act (USICA) (S. 1260) in any bill the House passes to address competition with China. The provision, Section 3407 — Annual Review on the Presence of Chinese Companies in United States Capital Markets — requires an annual report (for five years) that describes the material risks posed to the United States by the presence of companies incorporated in the People’s Republic of China (PRC) and present in U.S. capital markets (via direct listings, the OTC market, indices, ETFs, etc.) that are also known to be contributing to activities that seriously undermine the national security of the U.S., violate internationally recognized human rights, and/or substantially increase financial risk exposure for United States-based investors.
Dear Speaker Pelosi:
We write today to express our deepest respect for the efforts you are undertaking to develop a House version of the Senate’s U.S. Innovation and Competition Act (USICA) (S. 1260). We believe this legislative effort is one of the most important matters Congress has before it — and it will set the stage for how our nation addresses the threat the Chinese Communist Party (CCP) poses to U.S. economic and national security. There is one important provision in the Senate- passed USICA that CPA strongly supports to address this legislative effort.
Section 3407 — Annual Review on the Presence of Chinese Companies in United States Capital Markets — provides absolutely critical information that should be included in any final bill. This section requires an annual report (for five years) that describes the material risks posed to the United States by the presence of companies incorporated in the People’s Republic of China (PRC) and present in U.S. capital markets (via direct listings, the OTC market, indices, ETFs, etc.) that are also known to be contributing to activities that seriously undermine the national security of the U.S., violate internationally recognized human rights, and/or substantially increase financial risk exposure for United States-based investors. Such Chinese corporate abusers are on full display in their support of genocidal repression of the Uyghurs and other religious minorities, equipping concentration camps, trafficking in forced labor, building a repressive “surveillance state”, manufacturing advanced weapon systems for the PLA, militarizing China’s illegal islands in the South China Sea, assisting the crackdown of the people of Hong Kong and building Chinese forces for the domination of Taiwan — to name a few.
This key provision is vastly different from what is contained in Chairman Meeks’ Ensuring American Global Leadership and Engagement Act (EAGLE Act) (H.R. 3524), a bill supported by House Democrats to enhance U.S. investment, engagement, and leadership in the Indo-Pacific and globally. Unfortunately, this bill guts the substance and effectiveness of the required Senate report. Mr. Meeks’ version, among other major flaws:
- Strikes a requirement that this report occur annually;
- Limits the scope of the Chinese securities covered by the report by thousands of Chinese companies;
- Excludes companies which are non-compliant with U.S. federal securities laws or other SEC-required “material risk” disclosures; and
- Removes the Director of National Intelligence from consultation on the report.
We believe it is imperative for the protection of U.S. retail investors (over 100 million of them), our fundamental values, and national security that these reporting requirements be thorough and complete — and not deliberately limited in their ability to provide the necessary information to the Congress. We believe the Senate language will be far more effective in addressing the often- malign presence of Chinese companies in U.S. capital markets — including U.S.-sanctioned and other Chinese corporate “bad actors”. Watering down and narrowing this report would fail to comprehensively treat this strategic concern of the Unites States, as it involves well over a trillion dollars in American investor exposure entering the coffers of the Chinese Communist Party.
Accordingly, we respectfully implore you and your colleagues to preserve the Senate’s version of Section 3407 in any final House version of USICA.
Sincerely,
Zach Mottl, Chairman Michael Stumo, CEO
Coalition for a Prosperous America Coalition for a Prosperous America
