S4586-118

1. Short title This Act may be cited as the Stop Funding the CCP through A-Shares Act.

2. Findings; purposes The findings set forth in subsection (b) are based on facts disclosed by— 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); the record and reports of— 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)); 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 the annual threat assessment of the intelligence community under section 108B of the National Security Act of 1947 (50 U.S.C. 3043b); 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); the annual Country Reports on Human Rights Practices of the Department of State; and facts otherwise disclosed and ascertained. 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— 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; 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; 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; 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; 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; 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; 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; the Chinese military industrial-complex companies raise substantial capital by selling securities to United States institutional and individual investors; 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; in addition to Chinese military industrial-complex companies, those exchanges are replete with listings of securities of— Chinese military industrial-complex companies not included on United States sanctions lists; subsidiaries of such companies that are not included on United States sanctions lists; 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; companies specializing in advanced weapons technologies that represent an unusual and extraordinary threat to the national security of the United States; companies managing the People's Republic of China’s nuclear weapons program and the expansion of that program; companies building the People’s Liberation Army Air Force’s next-generation fighters and bombers; companies central to the People's Republic of China’s naval buildup of aircraft carriers, surface ships, and submarines; companies conducting the construction and militarization of artificial islands in the South China Sea; and 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; 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; 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; 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— 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; 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; 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; 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; 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; 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 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; 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— intellectual property theft and coerced transfer of intellectual property in exchange for market access; abuse of international trade rules and fora; 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; appropriation of fishery and mineral rights of other countries through means of intimidation and coercion by military and paramilitary actors; and international exploitation and destruction of mineral and fishery resources, and associated labor abuses; and 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— 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 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. 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.

4. Reports to Congress In accordance with subsection (b), the Secretary of the Treasury, in consultation with the Secretary of Commerce, the Secretary of State, the Secretary of Defense, the Assistant to the President for National Security Affairs, and the Director of National Intelligence, shall submit to Congress a report on, for the period covered by the report— the extent of mitigation and elimination of the conditions described in section 2(b); and the extent of the occurrence of the conditions described in section 2(b) with respect to securities listed on the Stock Exchange of Hong Kong. The Secretary of the Treasury shall submit to Congress a report described in subsection (a)— not later than 90 days after the date of enactment of this Act; not later than 180 days after the date of enactment of this Act; and once every 180 days after the date on which the Secretary submits the report required under paragraph (2) of this subsection.

6. Coordination The Secretary of the Treasury and the Securities and Exchange Commission may coordinate to carry out this Act. For the purposes of carrying out section 3(c)(2), the Secretary of the Treasury and the Securities and Exchange Commission may coordinate with the Attorney General.