Sullivan, Cornyn & Colleagues Introduce Outbound Investment Legislation to Counter China

WASHINGTON—U.S. Senators Dan Sullivan (R-Alaska), a member of the Senate Armed Services Committee (SASC) and John Cornyn (R-Texas) and 11 other senators have introduced the Foreign Investment Guardrails to Help Thwart (FIGHT) China Act, which would safeguard the United States’ national security against the growing threat posed by the People’s Republic of China (PRC) by prohibiting and requiring notification of U.S. investment in certain technologies in China.

“Our country’s investments in innovative technology give us an enormous advantage over the Chinese Communist Party,” said Sen. Sullivan. “But this advantage is threatened when American financial institutions invest in CCP-controlled companies that develop technology—like advanced semiconductors, artificial intelligence, quantum computing, and hypersonics—that could ultimately be used to kill Americans at home and Marines in the Taiwan Strait. I’m glad to once again join Senator Cornyn on legislation to put safeguards in place to ensure that American investments don’t go to support the nefarious ambitions of dictators around the world.”

“The threat China poses to the United States’ national and economic security continues to grow, and we have a generational opportunity to confront it with the FIGHT China Act,” said Sen. Cornyn. “By prohibiting and requiring notification of U.S. investments in certain technologies in China, this bill would help ensure American ingenuity, innovation, and investment do not end up in the hands of the Chinese Communist Party to be weaponized against us. The need to address capital flowing from the U.S. to bad actor nations was first realized during the first Trump administration, and I look forward to finishing what we started then by getting this vital priority over the finish line.”

Senator Sullivan previously spoke on the Senate floor emphasizing the importance of transparency in foreign investments that could pose a threat to American national security.

In addition to Senators Sullivan and Cornyn, the FIGHT China Act is cosponsored by Senators Catherine Cortez Masto (D-Nev.), Jim Banks (R-Ind.), Elissa Slotkin (D-Mich.), Pete Ricketts (R-Neb.), Michael Bennet (D-Col.), Bill Hagerty (R-Tenn.), Andy Kim (D-N.J.), Dave McCormick (R-Penn.), Chuck Schumer (D-N.Y.), Tim Scott (R-S.C.), Elizabeth Warren (D-Mass.), and John Fetterman (D-Penn.).

The FIGHT China Act would cover the following investments:

Acquisitions, including of limited partners, equity interest, property, or other assets;
Loans and debt financing;
Joint ventures;
And equity interest or debt conversions.

The legislation would establish exemptions for:

Transactions determined to be de minimis or in the national interest;
Investments in securities, derivatives of securities, or made as a limited partner in a venture capital fund, private equity fund, fund of funds, or other pooled investment fund;
Ancillary transactions undertaken by a financial institution;
Acquisitions of entire assets or entities located outside the PRC;
Certain transactions secondary to a covered national security transaction;
And certain ordinary or administrative business transactions.

The legislation would prohibit covered investments in the PRC for development or production of:

Certain advanced integrated circuits;
Certain AI models capable of a high number of operations;
Quantum computers and supercomputers;
Materials or components for hypersonics; and
Any of these technologies that are on the Munitions List, intended for use with nuclear equipment or facilities, or emerging technologies subject to export controls.

Lastly, the legislation would require U.S. persons to notify the U.S. Department of the Treasury within 14 days when making a covered investment in the PRC for the development or production of:

Any non-prohibited integrated circuit;
And any non-prohibited AI system which is used for military, surveillance, cybersecurity, penetration, forensics, or robotic system use or which meets a certain computing standard.

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