Congress Introduces DITCH Act to Force Divestment from Chinese Companies

Strategic Insights -

Congressman John Moolenaar, a member of the House Select Committee on the Chinese Communist Party (CCP), has introduced the Dump Investments in Troublesome Communist Holdings Act (DITCH Act) in collaboration with Select Committee Chairman Mike Gallagher and other lawmakers. The bill aims to prevent non-profit entities, university endowments, public pension plans, and other tax-exempt entities from aiding the Chinese Communist Party by forcing them to divest from Chinese companies. The DITCH Act defines disqualified Chinese companies and provides a waiver process for certain non-profit entities, requiring regular reports and public disclosure of the reasoning behind the waiver.

Key Takeaways:

  • The DITCH Act aims to prevent non-profit entities from financing the Chinese Communist Party's techno-totalitarian state by divesting from Chinese companies.
  • The bill defines disqualified Chinese companies as those incorporated or based in China, with more than 10% of stock owned by Chinese entities, or directly or indirectly owned by a Chinese entity.
  • The Treasury Secretary is authorized to grant waivers to non-profit entities with a compelling reason to hold certain Chinese assets, with the need to publicize the reasoning, require regular reports, and publish a report on outbound investment trends.
  • The bill is co-sponsored by Chairman Mike Gallagher, Senator Josh Hawley, and Representatives John Moolenaar, Rob Wittman, and Darin LaHood.
  • The proposed legislation emphasizes that investing in Chinese companies may lead to unwarranted detainment in a CCP prison, highlighting the risks of doing business with CCP entities.
  • American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party, according to Chairman Gallagher.
  • Senator Hawley notes that tax-exempt entities must stop investing in China or lose their tax-exempt status, as it advances the economic ambitions and military modernization efforts of the Chinese Communist Party, while selling out American workers and values.

Statistics:

  • Up to 10% of the stock in disqualified Chinese companies can be owned by Chinese entities.
  • Non-profit entities with a compelling reason to hold certain Chinese assets may be granted a waiver by the Treasury Secretary.
  • A waiver-recipient entity must submit regular reports to the Treasury Secretary.
  • The Treasury Secretary is required to publish a report within 360 days and annually thereafter on the patterns of outbound investment into China, including sectoral breakdowns.

Sources:

  • "Michigan Rep. Moolenaar, Chairman Gallagher Introduce Bill to Prevent Tax-Exempt Entities from Aiding Chinese Communist Party"
  • House Select Committee on the Chinese Communist Party website (link included in original text, not provided here)
  • Quote statements from Representatives Moolenaar, Gallagher, Wittman, LaHood, and Senator Hawley as cited in the original text.