In a bipartisan effort, more than 40 lawmakers are urging Congress to strengthen restrictions on outbound investments in the People’s Republic of China (PRC) that could potentially undermine U.S. national security. The bipartisan group, led by Rep. Mike Gallagher (R-Wis.) and Sen. Dan Sullivan (R-Alaska), has written to the leaders of the House and Senate Armed Services Committee, calling for the inclusion of strong restrictions on outbound U.S. investments in China and other adversarial nations in the National Defense Authorization Act (NDAA) for 2024.
The lawmakers express deep concerns about the potential national security threats posed by outbound capital flows and knowledge transfer to China, particularly in critical technology areas. They emphasize the need for the U.S. to have visibility into vulnerabilities and require notification of sensitive investments by U.S. firms in these countries. The lawmakers argue that outbound investment screening would fill a gap in the government’s ability to address national security threats and build on existing tools such as export controls, sanctions, and inbound investment screening.
The bipartisan support for outbound investment screening was demonstrated earlier this year when the Senate overwhelmingly approved an amendment on a 91-6 vote. The amendment would have created an outbound investment screening program led by the Treasury Department in coordination with the Commerce Department. While the Senate’s version of the NDAA stalled at the time, the broad support for the amendment indicates the growing recognition of the need for stricter measures to safeguard national security.
The letter calling for stronger restrictions on outbound investments in China received support from a diverse group of lawmakers, including the leaders of the House Select Committee on the Chinese Communist Party, Rep. Gallagher and Ranking Member Raja Krishnamoorthi (D-Ill.), as well as members of the bipartisan panel. House Foreign Affairs Committee Chairman Michael McCaul (R-Texas) and Ranking Member Gregory Meeks (D-N.Y.) were also signatories. Additionally, 19 senators, including Sen. Sullivan, Senate Homeland Security Committee Chairman Gary Peters (D-Mich.), and Senate Intelligence Committee Ranking Member Marco Rubio (R-Fla.), signed the letter.
The inclusion of strong restrictions on outbound investments in China and other adversarial nations in the NDAA would mark a significant step towards protecting U.S. national security interests. The bipartisan support reflects the growing consensus on the need to address the potential risks associated with the transfer of U.S. capital and know-how to adversarial countries. By implementing outbound investment screening, the U.S. aims to prevent the facilitation of technology that could be used against its own interests, whether through espionage or harm to servicemen and women.
As negotiations for the NDAA continue, lawmakers hope to ensure the inclusion of language addressing outbound investments in certain sectors of foreign countries of concern, with the ultimate goal of strengthening national defense and security policies. The bipartisan push for stricter restrictions on outbound investments in China highlights the growing concerns about the country’s military modernization and its potential impact on U.S. national security.
