(Bloomberg) -- A proposal to screen US companies’ investments in China is gaining momentum in Congress, with lawmakers pressing to enact legislation examining the practice before the end of the year.
Legislation by Senators Bob Casey, a Pennsylvania Democrat, and John Cornyn, a Texas Republican, would set up a reporting process for investments that may be related to national security. The focus will be on “transparency,” Cornyn said in an interview, not on restricting trade.
The calls in Congress, aired at a Senate Banking Committee hearing on Thursday, come as the Biden administration is weighing executive action on US investments in China.
Senator Sherrod Brown, the Ohio Democrat who heads the Banking Committee, said closer examination of US investments abroad, especially in China, is needed not only for national security but to help revitalize the manufacturing base in the US.
“In some cases, investments abroad outpaced investments in American workers,” Brown said. “It undermined our national security and hollowed out our middle class.”
But Senator Pat Toomey, the top Republican on the committee, said the US government should take care that a review process doesn’t unintentionally stifle investment or innovation.
“Creating a flawed outbound investment regime would undermine our economic leadership, discouraging the flow of capital, ideas, and people into the United States,” Toomey said in his opening remarks. “After all, why would you start a firm in the US if you know doing so risks precluding you from investing in China, the second largest economy in the world?”
Read more: Bidden Weighing Actions to Curb US Investment in China Tech
Cornyn said he and Casey are trying to resolve such concerns. Commerce Secretary Gina Raimondo has indicated the Biden administration would prefer to see a legislative fix to the problem rather than taking action by executive order, according to Cornyn.
Companion legislation has been introduced in the House and has been endorsed by the AFL-CIO labor union, Brown said. Casey and Cornyn sent a letter to the Biden administration earlier this week urging officials to take action on the issue that could be later bolstered by legislation. The letter was also signed by Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi.
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