Bill Would Bar Tax-Exempt Orgs From Investing in Chinese Firms
House and Senate Republicans introduced a bill this week that would force nonprofits, university endowments, public pension plans and other tax-exempt entities to divest from Chinese companies or lose their tax-exempt status. The Dump Investments in Troublesome Communist Holdings Act would also require the Treasury Department to publish a report within one year of the bill’s enactment to describe the “patterns of outbound investment into China generally, including a sectoral breakdown,” the House Select Committee on China said in an Aug. 1 news release.
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The committee said the bill is aimed at preventing American companies from aiding China’s military by helping to finance its “techno-totalitarian state.” Tax-exempt companies would be barred from investing in any companies incorporated or based in China; that have more than 10% of its stock, by vote or value, owned by some combination of Chinese entities; or that are directly or indirectly owned by a Chinese entity, “including through a derivative instrument or other contractual arrangements.” Treasury would be allowed to grant waivers to nonprofits “if their need to hold certain Chinese assets outweighs the national security risk.”
“American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party,” said House Select Committee Chair Mike Gallagher, R-Wis. Sen. Josh Hawley, R-Mo., who introduced the legislation in the Senate, said investing in China “advances the economic ambitions and military modernization efforts of the Chinese Communist Party while selling out American workers and values.”