Divesting from Communist China’s Military Act of 2026
Summary
The "Divesting from Communist China's Military Act of 2026" aims to strengthen national security by requiring the Secretary of the Treasury to include entities identified as Chinese military companies on the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List). This bill seeks to prevent US capital from funding the modernization of the Chinese military. It builds upon previous executive orders and legislation that address threats from Chinese military companies.
Expected Effects
The primary effect of this bill will be to restrict investment in companies identified as supporting the Chinese military-industrial complex. This will align enforcement approaches across different sanctions regimes. It will also limit the ability of these companies to raise capital through US exchanges.
Potential Benefits
- Enhances national security by limiting financial support to Chinese military companies.
- Harmonizes enforcement across different sanctions regimes.
- Protects US investors from unknowingly funding entities that pose national security risks.
- Reduces the risk of the Department of Defense indirectly contracting with or purchasing from Chinese military companies.
- Reinforces existing executive orders and legislation aimed at countering Chinese military influence.
Most Benefited Areas:
Potential Disadvantages
- May strain economic relations with China.
- Could potentially lead to retaliatory measures from China, impacting US businesses operating there.
- May require significant administrative resources to identify and list Chinese military companies accurately.
- Could create compliance challenges for US investors and financial institutions.
- The divestment period may not be sufficient for all investors to fully divest, potentially leading to financial losses.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the Constitution's objective to "provide for the common defence" (Preamble). Congress has the power to regulate commerce with foreign nations (Article I, Section 8, Clause 3), which supports the bill's restrictions on investment. The bill also implements executive orders related to national security, reinforcing the President's authority in foreign affairs.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).