‘Our greatest enemy should never have access to, nor benefit from, our capital markets or military procurement process in any way,’ Rep. Scott Perry said.
Rep. Scott Perry (R-Pa.) on Jan. 14 introduced the Divesting from Communist China’s Military Act, which would sanction and prohibit investment in Chinese military companies on the Pentagon’s blacklist.
The Pentagon and Treasury Department currently maintain, for different purposes, separate lists of Chinese companies within the military-industrial complex. The military is prohibited from opening contracts with entities on the Pentagon blacklist, and the Treasury’s list, which is separate from its entity list, prohibits securities transactions with the sanctioned companies.
This means that companies slated for a procurement ban for the U.S. military can still raise capital from U.S. investors on securities exchanges.
Perry’s bill aims to bring these lists together, requiring each department to align their lists and close that loophole.
“Our greatest enemy should never have access to, nor benefit from, our capital markets or military procurement process in any way; it’s ludicrous, and shouldn’t even have required legislation, but it does,” Perry said.
Sen. Rick Scott (R-Fla.) is introducing companion legislation in the Senate.
“For too long, Chinese companies have been given free rein to lie, cheat, and circumvent U.S. regulations intended to keep American investors safe and American dollars out of the hands of companies, like those associated with the Chinese military, bent on ruining our economy and our country,” he said. “This bill is a commonsense effort to keep Americans’ money out of the hands of our enemies.”
The Pentagon was mandated to maintain its list of companies owned or controlled by the Chinese military as part of the fiscal year 1999 defense budget. In 2021, President Joe Biden’s executive order required the Pentagon to maintain a broader list, capturing all companies believed to be a part of the Chinese military industrial complex, sometimes referred to as the 1260H list.
Companies on the list do not face formal penalties such as sanctions, but since the beginning of 2024, the U.S. military was prohibited from awarding new contracts to entities on the list. There is no formal process for removal from the list, which the Pentagon is required to update base on available information. The 2025 list includes 134 entities.
