U.S. Rep. Mark Green (R-Tenn.) confers with an aide during a House Oversight and Reform Committee hearing, in the Rayburn House Office Building on Capitol Hill in Washington, on March 11, 2020. (Drew Angerer/Getty Images)

Lawmaker to Introduce Bill Blocking Chinese Takeovers of US Companies Amid Pandemic

Rep. Mark Green (R-Tenn.) plans to introduce a new bill aimed at stopping China from scooping up companies vital to U.S. national security.

Specifically, he’s seeking to protect U.S. businesses “that supply the equipment, systems, and technologies for our military” from Chinese acquisition.

“China is looking to take advantage of the coronavirus crisis and gobble up distressed companies that are vital to our national defense while they are economically vulnerable and looking for capital,” Green said in an April 22 statement. “We cannot let this happen.”

The lawmaker didn’t specify which types of firms the Chinese regime was eyeing, but said the United States “will be vulnerable to attack and at a comparative disadvantage with China” if U.S. supply chains aren’t secured.

Green said he will introduce the SOS ACT (Secure Our Systems Against China’s Tactics), which would set aside $10 billion from the CARES Act, the virus-related relief package, “to incentivize America’s investors to invest their capital in vulnerable companies that are critical to our national security,” Green said.

Congress is currently in recess until at least May, as part of social distancing measures to prevent the CCP virus, commonly known as the novel coronavirus, from spreading.

On March 27, President Donald Trump signed the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act), a $2.2 trillion economic recovery package to provide economic relief for Americans and businesses affected by the pandemic.

Green said the bill wouldn’t require new funding but would reallocate existing funding in the rescue package.

China seeks to use the pandemic to advance its economic goals, according to a March report by U.S.-based independent consultancy Horizon Advisory, which analyzed recent policies and notices announced by Chinese government agencies, regional governments, and research institutes.

Recently, UK lawmakers also expressed concerns when Chinese state-owned investment firm China Reform sought to appoint four new directors to the board of Imagination Technologies, a leading British semiconductor chip designer.

The firm was acquired by U.S.-based private equity firm Canyon Bridge in 2017, with the latter backed by China Reform.

“What we think is going on is the Chinese are trying to export the technology base from here to China, and that’s inappropriate,” British lawmaker David Davis told Reuters on April 14.

Other governments around the world have also raised the alarm about China’s desire to buy companies that are suffering financial losses due to the pandemic.

Last week, India announced that investment from countries with which it shares a land border will need to obtain government approval, in an effort to curb “opportunistic” takeovers and acquisitions, according to Reuters.

The new investment screening is widely viewed as focused on Chinese companies. Two unnamed senior Indian government sources told Reuters that investments coming from Hong Kong would also be screened.

Meanwhile, “Germany is on high alert over any possible attempts by China to exploit the economic crisis caused by the coronavirus to take over companies,” Reinhard Hans Bütikofer, a member of the European Parliament, told the Nikkei Asian Review in early April.

Australia’s Foreign Investment Review Board also is wary about foreign takeovers, particularly by Chinese firms, of financially distressed local businesses, the Sydney Morning Herald reported on March 26.

NATO Secretary-General Jens Stoltenberg, during a web conference with alliance countries’ defense ministers on April 15, said the “geopolitical effects of the pandemic could be significant.”

“Some may seek to use the economic downturn as an opening to invest in our critical industries and infrastructure, which in turn may affect our long-term security and our ability to deal with the next crisis when it comes,” said Stoltenberg, without identifying specific countries.