“It’s only prudent that we implement a screening mechanism to prevent western investors from unwittingly financing the rise of the military civil fusion in Beijing.”
WASHINGTON, DC – U.S. Rep. Andy Barr (KY-06), a senior member of the House Financial Services Committee and the House Select Committee on the Chinese Communist Party (CCP), addressed a breakfast meeting of The Ripon Society yesterday, where he discussed his legislation to safeguard American investments from aiding the CCP.
Called the Comprehensive Outbound Investment National Security (COINS) Act, the bill establishes clear safeguards to protect Americans’ savings and retirement funds while creating a framework to prevent U.S. dollars from being invested in key sectors of China’s military and economy. Barr, who serves as Chairman of the Financial Institutions and Monetary Policy Subcommittee, opened the discussion by outlining the significant presence of Chinese companies in U.S. financial markets and raising concerns over American investments in blacklisted firms tied to China’s military expansion and human rights abuses.
Barr then challenged the long-standing notion that integrating China into the global financial system would lead to political and economic liberalization.
“For several decades there’s been a focus on opening up investment into China. The thought being that if Western capital flowed into China, that they would change, that the government in Beijing would change, that they would democratize, that they would liberalize their economy, that they would converge, that there would be a convergence in the economic systems of the two countries.
“What has turned out not just in our trading system, but in our capital flows, is that they’ve exploited that open investment environment to fuel and fund the Chinese military-industrial complex.”
Barr emphasized that while the U.S. benefits from an open investment system, it must also be strategic in addressing national security threats. He advocated for a screening mechanism to prevent Western investors from unknowingly financing the CCP’s military advancements.
“Our strategic advantage is that we’re capitalists, that we have an open investment ethic in our country, and that we welcome not only foreign direct investment, but outbound investment that enriches and diversifies Americans in many respects.
“We have to be smart too, and we have to recognize that some of the capital that flows into China does, in fact, threaten international security. It’s only prudent that we implement a screening mechanism to prevent western investors from unwittingly financing the rise of the military civil fusion in Beijing.”
Later on, Barr discussed how the reintroduction of the COINS Act sets out to do just that through three key provisions.
“The first title is a sanctions-based approach and entity-based approach that authorizes the Treasury to impose full blocking sanctions on any of these Chinese military-industrial complex companies that the Treasury believes in fact threaten national security.
“There’s also a second title, and that is responding to the China Select Committee’s concern that Title One doesn’t get at these early-stage companies – venture capital, private equity – off of public exchanges. So, we tried to clearly define technologies, now we want to make sure that we’re still providing a green light, red light approach so that if you do have a supply chain issue in China, but it’s benign technology, it’s a benign investment – it doesn’t implicate national security.”
“The third title is a mechanism for the Treasury to inform Congress on an annual basis that if you have a company that’s listed on the commerce entity list, but it’s not on the CMIC list, or if it’s on the 1260H Department of Defense list. It’s an effort to harmonize all these disparate lists out there and give Congress some input on which companies are subject to the full blocking sanctions or the investment restrictions versus maybe an entity-listed company that doesn’t deserve that heightened level of scrutiny. It’s a list coordination section.”
“My objectives in this are number one, to solve the problem to prevent Western capital from flowing into entities threatening our national security.
“But secondly, providing, investors with certainty, clarity, and also keeping with that idea that we should not try to copy China, that we should keep an open investment environment, that we should encourage both inbound and outbound investment with allies and partners that actually strengthens our national security. It doesn’t undermine our national security. And that’s the balance we’re trying to achieve through a multilateral approach.”
To view Barr’s remarks before The Ripon Society breakfast discussion on Thursday, please click the link below:
The Ripon Society is a public policy organization that was founded in 1962 and takes its name from the town where the Republican Party was born in 1854 – Ripon, Wisconsin. One of the main goals of The Ripon Society is to promote the ideas and principles that have made America great and contributed to the GOP’s success. These ideas include keeping our nation secure, keeping taxes low and having a federal government that is smaller, smarter and more accountable to the people.