[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4586 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 4586
To prevent the funding of malign activities of the Chinese Communist
Party though the sale of ``A-Shares'' on certain securities exchanges
controlled by the Chinese Communist Party by prohibiting the purchase,
sale, and ownership of such securities by United States investors, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 18, 2024
Mr. Scott of Florida introduced the following bill; which was read
twice and referred to the Committee on Banking, Housing, and Urban
Affairs
_______________________________________________________________________
A BILL
To prevent the funding of malign activities of the Chinese Communist
Party though the sale of ``A-Shares'' on certain securities exchanges
controlled by the Chinese Communist Party by prohibiting the purchase,
sale, and ownership of such securities by United States investors, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Funding the CCP through A-
Shares Act''.
SEC. 2. FINDINGS; PURPOSES.
(a) Basis of Findings.--The findings set forth in subsection (b)
are based on facts disclosed by--
(1) Executive Order 13959, Executive Order 13974, and
Executive Order 14032 (50 U.S.C. 1701 note; relating to
addressing the threat from securities investments that finance
certain companies of the People's Republic of China);
(2) the record and reports of--
(A) the United States-China Economic and Security
Review Commission with respect to the national security
implications of the bilateral economic and financial
relationship between the United States and the People's
Republic of China under section 1238(b)(2) of the Floyd
D. Spence National Defense Authorization Act for Fiscal
Year 2001 (as enacted into law by Public Law 106-398;
22 U.S.C. 7002(b)(2));
(B) the Congressional-Executive Commission on the
People's Republic of China with respect to the acts of
the People's Republic of China that reflect compliance
with or violation of human rights and the development
of the rule of law in the People's Republic of China
under title III of the U.S.-China Relations Act of 2000
(22 U.S.C. 6911 et seq.); and
(3) the annual threat assessment of the intelligence
community under section 108B of the National Security Act of
1947 (50 U.S.C. 3043b);
(4) the annual report of the Department of Defense on
military and security developments involving the People's
Republic of China under section 1202 of the National Defense
Authorization Act for Fiscal Year 2000 (Public Law 106-65; 10
U.S.C. 113 note);
(5) the annual Country Reports on Human Rights Practices of
the Department of State; and
(6) facts otherwise disclosed and ascertained.
(b) Findings.--Congress finds that investments in securities listed
on certain securities exchanges in the People's Republic of China
adversely affect the public interest of the United States and the
interest of United States investors, in that, among other things--
(1) the ideology, goals, and actions of the Chinese
Communist Party are inimical to the national security, economic
security, fundamental values, and liberty of the United States
and citizens of the United States;
(2) all governmental, economic, business, and social
institutions in the People's Republic of China are effectively
instrumentalities of the Chinese Communist Party, as reflected
in the Party's charter, which states, ``Government, the
military, society and schools, north, south, east and west--the
party leads them all'', and are utilized by the Chinese
Communist Party to achieve its goals, paramount among which are
staying in power and vanquishing the United States as the
world's leading superpower;
(3) among those institutions is the People's Liberation
Army, an instrumentality of the Chinese Communist Party
reporting to the Central Military Commission of the Chinese
Communist Party;
(4) the core mission of the People's Liberation Army is to
sustain the Chinese Communist Party's grip on power, as was
demonstrated by the Chinese Communist Party's use of the
People's Liberation Army in putting down the pro-democracy
demonstrations of 1989;
(5) the Chinese Communist Party is actively undermining the
national security of the United States through a massive
buildup of the military capabilities of the People's Liberation
Army and increasingly aggressive actions by military and
paramilitary actors;
(6) the Chinese Communist Party supports the buildup of
those capabilities through a program of ``military-civil
fusion'' under which Chinese companies and researchers must
share technology and equipment with the Chinese military, with
the goal of ensuring that the People's Liberation Army achieves
global military dominance by 2049;
(7) those companies, known as Chinese military industrial-
complex companies, although often representing themselves as
private and civilian, are, in fact, directly supporting the
Chinese Communist Party's military, intelligence, and security
apparatuses and providing aid in their development and
modernization;
(8) the Chinese military industrial-complex companies raise
substantial capital by selling securities to United States
institutional and individual investors;
(9) the Chinese military industrial-complex companies
increasingly do so by listing their securities for sale on the
Shanghai and Shenzhen stock exchanges, which are self-
proclaimed instrumentalities of the Chinese Communist Party and
are regulated by the China Securities Regulatory Commission,
which is also an instrumentality of the Chinese Communist
Party, and securities so listed are commonly referred to as
``A-Shares'';
(10) in addition to Chinese military industrial-complex
companies, those exchanges are replete with listings of
securities of--
(A) Chinese military industrial-complex companies
not included on United States sanctions lists;
(B) subsidiaries of such companies that are not
included on United States sanctions lists;
(C) companies denied access to United States
technology and equipment because those entities support
the development, production, and deployment of military
items for use by military end-users, including the
Chinese armed forces, national guard, national police,
and government intelligence organizations;
(D) companies specializing in advanced weapons
technologies that represent an unusual and
extraordinary threat to the national security of the
United States;
(E) companies managing the People's Republic of
China's nuclear weapons program and the expansion of
that program;
(F) companies building the People's Liberation Army
Air Force's next-generation fighters and bombers;
(G) companies central to the People's Republic of
China's naval buildup of aircraft carriers, surface
ships, and submarines;
(H) companies conducting the construction and
militarization of artificial islands in the South China
Sea; and
(I) companies involved in the development and use
of surveillance technology to facilitate repression and
egregious human rights abuses and advance the ideology
and strategic goals of the Chinese Communist Party
domestically and internationally;
(11) investment of United States capital by United States
investors in the securities of companies listed on those
exchanges has increased dramatically through the inclusion of
those securities in indices published by major index providers
and in investment products tracking those indexes offered by
the most prominent asset managers in the United States;
(12) investment of United States capital by United States
investors through those exchanges in the securities of those
companies, which directly support the efforts of the military,
intelligence, and other security apparatuses of the People's
Republic of China, and in other entities indirectly
contributing to the development of these apparatuses by their
contribution to the country's economy, presents an unusual and
extraordinary threat to the national security, foreign policy,
United States investor community, and economy of the United
States, constituting a national emergency;
(13) investment of United States capital by United States
investors in securities listed on those exchanges also
supports, both indirectly through general economic support, and
directly through the operations of specific companies, the
Chinese Communist Party's ongoing engagement of widespread,
systematic, and egregious violations of human rights,
including--
(A) pursuit of a relentless campaign against the
Uyghurs in the Xinjiang Uyghur Autonomous Region in the
western People's Republic of China, characterized by
the United States Department of State as one of
genocide, involving forced labor, rape, compulsory
sterilization, and organ harvesting, all of which
continue, despite the enactment of the Act entitled
``An Act to ensure that goods made with forced labor in
the Xinjiang Autonomous Region of the People's Republic
of China do not enter the United States market, and for
other purposes'', approved December 23, 2021 (Public
Law 117-78; 135 Stat. 1525) (commonly referred to as
the ``Uyghur Forced Labor Prevention Act''), which was
intended to block goods made with Uyghur forced labor
from entering the United States;
(B) continued pursuit of the decades-long campaign
to eradicate Tibet's unique religious, ethnic,
cultural, and linguistic identity, with Tibetans living
in a virtual police state and facing severe
restrictions of their human rights and fundamental
freedoms, including freedom of religion or belief;
(C) pursuit of a 5-year plan to bring all religious
doctrine and practice in line with Communist Party
doctrine, including forbidding youth from participating
in religious activities and implementation of mass
detention camps that indoctrinate detainees in Chinese
Communist Party ideology and force renunciation of
faith and subjecting individuals found violating the
laws and regulations controlling religion to
harassment, surveillance, interrogation, arrest,
beatings, sentences to prison, detention, or
disappearance;
(D) strict control of all domestic news reporting
and the telecommunications infrastructure, ensuring
that only information matching the Chinese Communist
Party's desired narrative is shared, through the
blocking of websites, mass deletion of posts and user
accounts, and imposition of severe punishment on those
who dare speak out;
(E) arbitrary arrest of those who do not conform to
Chinese Communist Party ideology, with those brave
enough to speak out subject to prolonged and secret
detention without access to legal counsel or the
ability to communicate with their families, and the use
of such arrests and the terror they deliberately
instill as tools in the Chinese Communist Party's
arsenal to maintain unchallenged power over people;
(F) operation of a factory system in which
occupational safety and health violations are prevalent
and working and living conditions in factories with
adjacent dormitories are tantamount to forced labor
camps, including, in the Xinjiang Uyghur Autonomous
Region, the subsidization by the Chinese Communist
Party of Chinese companies to set up factories near
detention camps in the region and to transfer camp
victims and others from rural areas to factories in
other parts of the region and throughout the People's
Republic of China to work as forced labor under the
guise of ``vocational training'' and ``poverty
alleviation'' programs; and
(G) imposition of a similar regime of systemic
repression on the people of Hong Kong, in violation of
promises to the contrary, including enactment of
draconian national security legislation that provides
for up to life in prison for the ambiguously defined
crimes of secession, subversion, terrorism, and
collusion with foreign powers, removal of books
critical of the Chinese Communist Party from bookstore
and library shelves, banning democratic political
slogans, and requiring schools to enforce censorship of
teachers and students;
(14) investment of United States capital by United States
investors in securities listed on exchanges described in
paragraph (9) also benefits companies engaged in or benefitting
from the Chinese Communist Party's implementation, through
instrumentalities it controls, of unfair and malicious economic
and commercial practices, including--
(A) intellectual property theft and coerced
transfer of intellectual property in exchange for
market access;
(B) abuse of international trade rules and fora;
(C) campaigns to monopolize targeted industries and
destroy competitors via state subsidization of capital
and inputs, import protections and export incentives,
and exploitation of labor and the environment;
(D) appropriation of fishery and mineral rights of
other countries through means of intimidation and
coercion by military and paramilitary actors; and
(E) international exploitation and destruction of
mineral and fishery resources, and associated labor
abuses; and
(15) investment of United States capital by United States
investors in securities listed on those exchanges also poses a
substantial, and intolerable, risk to United States investors
arising from--
(A) the refusal of the China Securities Regulatory
Commission to accept normal accounting standards in its
capital markets for any securities, preventing third-
party auditors from knowing whether a Chinese company
is adhering to the generally accepted accounting
principles guidelines required of securities traded on
United States stock exchanges; and
(B) the failure of Chinese publicly traded
companies to engage in adequate material risk
disclosure, publish their financial information,
implement the rule of law, and adopt accepted corporate
governance standards.
(c) Purposes.--The purposes of this Act are to mitigate and, to the
extent feasible, to eliminate the conditions described in subsection
(b), which adversely affect the public interest of the United States
and the interests of United States investors.
SEC. 3. PROHIBITED ACTS.
(a) Definitions.--In this section:
(1) Acting in a professional capacity.--The term ``acting
in a professional capacity'' includes acting as--
(A) a member (as defined in section 3(a)(3)(A) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(3)(A))) of a national securities exchange;
(B) a member (as defined in section 3(a)(3)(B) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(3)(B))) of a registered securities association;
or
(C) an associated person of a member (as defined in
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a))) described in subparagraph (A) or (B).
(2) Assignment.--The term ``assignment'' has the meaning
given the term in section 2(a) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a)).
(3) Commerce.--The term ``commerce'' has the meaning given
the term in section 4 of the Federal Trade Commission Act (15
U.S.C. 44).
(4) Covered exchange.--The term ``covered exchange''
means--
(A) the Shanghai Stock Exchange (or any subsidiary
of that exchange);
(B) the Shenzhen Stock Exchange (or any subsidiary
of that exchange);
(C) the Beijing Stock Exchange (or any subsidiary
of that exchange); or
(D) any other national exchange, or subsidiary of
such an exchange, that is subject to the influence or
control of the Party Committee of the China Securities
Regulatory Commission, other than the Stock Exchange of
Hong Kong.
(5) Covered security.--The term ``covered security'' means
a security that--
(A) as of the date