Republican Study Committee Introduces the Countering Communist China Act
On February 29, 2024, Republican Study Committee (“RSC”) Chairman, Representative Kevin Hern (OK-01), and RSC National Security Task Force Chairman, Joe Wilson (SC-02), introduced H.R. 7476, the Countering Communist China Act (the “Act”). The RSC is the largest Member Caucus in Congress, consisting of self-described “conservative” Republicans in Congress. In its press release regarding the Act , RSC notes that the legislation is “the largest and most comprehensive legislation addressing the Chinese Communist Party (“CCP”) ever introduced in Congress.” The legislation also demonstrates how the positions of RSC Members have shifted to taking a much broader, and somewhat more confrontational, approach to US-China economic relations since the RSC’s last set of legislative recommendations in 2020.
The Act covers several topics designed to counter what it describes as “the malign influence and theft perpetuated by the People’s Republic of China” (“PRC”) and the CCP. These include: trade, investment, and economic relations; medical and national security supply chains; driving investment, research, and development; education; democracy, human rights, and Taiwan; defense; protection of intellectual property; financial services; fentanyl; national security authorizations; and energy.
If passed, the Act would:
- require or authorize the President to impose sanctions, through the Department of Treasury’s Office of Foreign Assets Control, against:
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- persons who “knowingly engage in significant operations in the defense and related materiel sector or the surveillance technology sector of the economy” of the PRC;1
- persons who “knowingly commit a significant act of malign disinformation on behalf of the government of a foreign country or foreign political party that has the direct purpose or effect of influencing political, diplomatic, or educational activities in the United States for the purpose of harming” either (1) the national security or defense of the United States; or (2) the safety and security of any US citizen or alien lawfully admitted for permanent residence;2
- any foreign person that the President determines has “developed, maintains, provides, owns, or controls a mobile application or software program” that (1) “engages in the theft or unauthorized transmission of a user’s data to servers located in China,” and (2) provides to the government of the PRC, the CCP, or any person owned by or controlled by the PRC or CCP access to such data;3
- any person the President determines is a senior official of the CCP, including the CCP Politburo, and has engaged in or provided support to or for (1) a malign disinformation campaign or political warfare operation against the United States; (2) the theft of intellectual property of a US person; (3) threats or actions undermining the sovereignty of Taiwan; and (4) the forced closure or destruction of churches, mosques, Buddhist temples or any other place of worship in China, or religious practice of Christians, Muslims, Buddhists or any other religious group in China;4
- certain CCP leadership, including He Lifeng, Zhao Leji, Cai Qi, Ding Xuexiang, and Li Xi;5 and
- persons who have been found to operate “in a sector of China’s economy wherein persons have engaged in a pattern of significant theft of the intellectual property of a U.S. person, or received the intellectual property of a U.S. person obtained through a pattern of significant theft.”6
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- require the President to both identify and publish a list of technologies that are an acute threat to US national security if developed by a “country of concern”7 and prescribe regulations to prohibit US persons from “engaging, directly or indirectly, in a covered activity involving a category of technologies and products on such list of categories of technologies and products in a covered sector.”8
- require, within two years of the enactment of the Act, the United States (1) to halt normal trade relations treatment to PRC products and (2) to withdrawal from normal trade relations treatment with the PRC under Public Law 106–286, which authorizes the extension of nondiscriminatory treatment (normal trade relations treatment) to the PRC. The Act includes “fast-track” authority for legislation that would develop and impose a new tariffs schedule for imports from China. The recommendation that Congress establish a new and China-specific tariff schedule is analogous to the recommendation made by the bipartisan China Select Committee. Absent the enactment of such legislation the Act would reclassify the PRC to much higher, non-Most Favored Nation, Tariff Rates under Column 2 of the Tariff Act of 1930.9
- require the Department of Commerce to continue certain export controls, including those against Huawei Technologies Co. Ltd and Honor Device Co. Ltd.10
- The Act also provides for “fast-track” authority for free trade agreements negotiated with Taiwan, Philippines, Indonesia, Thailand, Malaysia, New Zealand, and the United Kingdom. In a change from its trade policy recommendations in 2020, the Act does not call for the establishment of a trade agreement with India.
In addition to the above and among its many provisions and protections, the Act would also prohibit retirement plan fiduciaries from acquiring an interest between the plan and a foreign adversary entity;11 require the Securities and Exchange Commission to amend its annual disclosures for private fund assets in countries of concern;12 create tax incentives for relocating medical manufacturing to the United States13 and US investment in medical supply chain security;14 restrict funding of institutions partnering with the PRC;15 modify the President’s authorities to regulate or prohibit the importation or exportation of information or informational materials containing sensitive personal data under the International Emergency Powers Act;16 and require the President to take necessary steps “to prohibit the awarding or renewal of any Federal contract or procurement agreement with any technology company the President determines has provided hardware or software to” the PRC or to any state-owned enterprise of China.17
The Act was referred to the House Committee on Foreign Affairs, as well as several others, on February 29, 2024, but no further action has been taken. The Countering Communist China Act demonstrates the escalation of concerns relating to China by the US Congress, and represents an aggressive approach towards these concerns by US conservatives. Consideration of this legislation comes at the same time as other bills that seek to limit China’s influence over the US economy, and as the House Select Committee on the Chinese Communist Party continues to scrutinize US business activity in China. Interested parties should continue to monitor the Act as it moves through the legislative process, including any amendments that may be introduced.
1 See Supra n. 2, Sec. 102 (a).
7 Id. Sec. 101(c)(1)(A), “Country of Concern” means “(i) the Democratic People’s Republic of North Korea; (ii) the People’s Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region; (iii) the Russian Federation; and (iv) the Islamic Republic of Iran” as well as “any other country the President determines necessary to ensure a country specified in clause (i), (ii), (iii), or (iv)” is “unable to circumvent the provisions of this Act and the regulations issued pursuant to this Act.”
9 See Supra n. 2, Sec. 103(a).
