Investments in China: NC’s Patrick McHenry is Out of Step on this Issue

Patrick McHenry
Dan DiMicco


Dan DiMicco is former CEO of Nucor Corp. in Charlotte and co-founder and vice chair of Coalition for a Prosperous America.

It’s hard to find much that Americans agree on these days. And yet, in poll after poll, voters unite on one issue — China. Across the political spectrum, Americans believe China poses a serious economic and military threat to the United States. They’re right to worry since Beijing has aligned itself with Russia and Iran, continues to hack U.S companies, and is threatening Taiwan. 
It should be a no-brainer then to make sure that America’s investors don’t fund any of China’s military ambitions. And yet our very own Congressman, Patrick McHenry of North Carolina, is inexplicably blocking bipartisan congressional efforts to limit U.S. investments in China.
It would be great if we could wave a magic wand and make sure that not one dime of Wall Street money goes to Beijing. But capital markets are a huge arena, and it’s difficult to police the literally trillions of dollars flowing around the globe each day.
However, Sens. John Cornyn (R-Texas) and Bob Casey (D-Penn.) have offered a pragmatic solution in this year’s National Defense Authorization Act. They’ve introduced an amendment that would require Americans to notify the U.S. government of potential investments in technologies tied to China’s military. 
Sounds simple, right? U.S. investors shouldn’t help China develop technologies intended to kill American soldiers. 
But, as Chairman of the House Financial Services Committee, McHenry is actively blocking the Cornyn-Casey proposal.
Why would McHenry take such a position? For starters, he believes this would limit the ability of Americans to sit on the boards of Chinese companies. In a joint letter to colleagues, he said that it would be desirable to have “Americans on the boards of Chinese companies spreading Western standards.” 
That’s a wildly naive view. But McHenry also believes that U.S. investment in China has reached a “10-year low” and thus should be of little concern. This, too, is seriously misguided. In October, the Financial Times reported that Vanguard Group Inc., the world’s second-largest asset manager, “was channelling investment into 60 companies within China’s military industrial complex.” The article was so damning that Vanguard has subsequently moved to close its China fund. 
It’s not just Vanguard, though. BlackRock, MSCI, and other Wall Street firms continue to offer investment funds containing the very companies currently building and modernizing China’s military. And Fidelity International just introduced its first fixed income mutual fund in China.
If anything, the problem is getting worse. There are literally thousands of Chinese companies tied to China’s military included in investment products sold by leading Wall Street fund managers such as BlackRock, Charles Schwab, Fidelity, State Street and PIMCO. 
McHenry is far out of step with the will of the American people on this. And the Cornyn-Casey proposal passed in the Senate this summer by a vote of 91-6. Senator Cornyn recently noted that it would be a slam-dunk in the House, too, saying, “Almost everybody in the House agrees with us. It’s Chairman McHenry who’s the one who derailed it.” 
The wider issue is whether the U.S. can continue to compete with China. Beijing is rapidly modernizing its military and China has also openly demonstrated its brutality through the use of slave labor in Xinjiang.
The prudent move would be to take every possible step to limit investment in China. Yet, McHenry is actually on record as favoring “more private investment” in China. This is dangerously foolish. 
We no longer have the luxury of courting Beijing and hoping that China will “westernize” and “democratize.” The Pentagon is already focused on China’s military escalation, including the growth of its nuclear program and its increasing military presence overseas. Congress must be equally vigilant.
The American people want strong action on China. Lawmakers must go over McHenry’s head and use every means possible to block Beijing from accessing U.S. investment that can further develop China’s military.


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