Divesting from Communist China’s Military Act of 2026
- Bill Number
- H.R. 7075
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Status
- Introduced
- Latest Action
- 2026-01-14: Referred to the Committee on Foreign Affairs, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2026-04-21T09:23:28Z
AI-Generated Summary
Purpose
This bill, titled the Divesting from Communist China's Military Act of 2026, aims to prevent U.S. investors from funding Chinese entities tied to China's military by requiring the Treasury Department to automatically list certain "Chinese military companies" on a sanctions-related list. This builds on prior executive orders and defense laws to block access to U.S. capital markets.
Key Provisions
- Mandatory Listing: Within 90 days after the Secretary of Defense identifies an entity as a "Chinese military company" (per section 1260H of the 2021 National Defense Authorization Act), the Secretary of the Treasury must add it to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List) if it's not already there. This list is maintained by Treasury's Office of Foreign Assets Control (OFAC).
- Prohibitions Trigger: Within 60 days of listing, restrictions from Executive Order 13959 (as amended by EO 14032) apply, banning U.S. persons from buying or holding securities of these entities.
- Divestment Grace Period: U.S. persons have 1 year from the listing date to buy or sell publicly traded securities only to divest (sell off) their holdings.
- Definitions:
- "Chinese military company": Entities owned, controlled, or affiliated with China's military or acting as contributors to its defense industry while providing commercial services.
- "U.S. person": U.S. citizens, permanent residents, U.S.-organized entities, or anyone in the U.S.
- "Publicly traded security": Stocks or derivatives traded on exchanges or over-the-counter in any jurisdiction.
Significant Changes to Existing Law
- Automation and Mandate: Previously, Treasury had discretion; this bill requires automatic addition to the NS-CMIC List based on Defense Department identifications, linking defense procurement bans (from the 2024 NDAA) to financial sanctions.
- Harmonization: Aligns DoD's upcoming bans on contracts/purchases (effective 2026-2027) with investment restrictions, closing a gap where these companies could still raise U.S. capital via securities.
Potential Impacts
- Government Agencies: Increases coordination between Defense (identification) and Treasury (listing/enforcement); DoD procurement bans will be reinforced by market restrictions.
- Citizens/Investors: U.S. investors must divest within 1 year, potentially affecting retirement funds, mutual funds, or portfolios holding Chinese stocks; limits future investments in these firms.
- International Relations: Targets China's "military-civil fusion" strategy, likely straining U.S.-China economic ties by denying these companies U.S. capital access.
Main Stakeholders Affected
- U.S. Government: Departments of Defense and Treasury; congressional committees (e.g., House Financial Services, Senate Banking).
- U.S. Investors and Financial Institutions: Pension funds, brokers, and individuals holding affected securities.
- Chinese Entities: Companies identified as military-linked (e.g., those affiliated with People's Liberation Army or defense contributors), losing U.S. market access.
- Broader Economy: U.S. stock exchanges and funds with China exposure.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens enforcement of executive orders under the International Emergency Economic Powers Act (IEEPA); defines terms to avoid ambiguity in sanctions application.
- Constitutional: Congress asserts oversight of foreign investment restrictions, complementing presidential emergency powers without overriding them.
- Political: Signals bipartisan concern over national security threats from China's military funding via U.S. markets; could set precedent for mandatory cross-agency sanctions on other adversaries.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Rep. Tiffany, Thomas P. [R-WI-7]
Recent Actions
- 2026-01-14: Referred to the Committee on Foreign Affairs, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-01-14: Referred to the Committee on Foreign Affairs, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-01-14: Introduced in House
- 2026-01-14: Introduced in House
Bill Versions
- Divesting from Communist China’s Military Act of 2026 — issued 2026-01-14 — PDF (8 pages)