[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4586 Introduced in Senate (IS)]

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118th CONGRESS
  2d Session
                                S. 4586

 To prevent the funding of malign activities of the Chinese Communist 
 Party though the sale of ``A-Shares'' on certain securities exchanges 
controlled by the Chinese Communist Party by prohibiting the purchase, 
sale, and ownership of such securities by United States investors, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 18, 2024

  Mr. Scott of Florida introduced the following bill; which was read 
  twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

_______________________________________________________________________

                                 A BILL


 
 To prevent the funding of malign activities of the Chinese Communist 
 Party though the sale of ``A-Shares'' on certain securities exchanges 
controlled by the Chinese Communist Party by prohibiting the purchase, 
sale, and ownership of such securities by United States investors, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stop Funding the CCP through A-
Shares Act''.

SEC. 2. FINDINGS; PURPOSES.

    (a) Basis of Findings.--The findings set forth in subsection (b) 
are based on facts disclosed by--
            (1) Executive Order 13959, Executive Order 13974, and 
        Executive Order 14032 (50 U.S.C. 1701 note; relating to 
        addressing the threat from securities investments that finance 
        certain companies of the People's Republic of China);
            (2) the record and reports of--
                    (A) the United States-China Economic and Security 
                Review Commission with respect to the national security 
                implications of the bilateral economic and financial 
                relationship between the United States and the People's 
                Republic of China under section 1238(b)(2) of the Floyd 
                D. Spence National Defense Authorization Act for Fiscal 
                Year 2001 (as enacted into law by Public Law 106-398; 
                22 U.S.C. 7002(b)(2));
                    (B) the Congressional-Executive Commission on the 
                People's Republic of China with respect to the acts of 
                the People's Republic of China that reflect compliance 
                with or violation of human rights and the development 
                of the rule of law in the People's Republic of China 
                under title III of the U.S.-China Relations Act of 2000 
                (22 U.S.C. 6911 et seq.); and
            (3) the annual threat assessment of the intelligence 
        community under section 108B of the National Security Act of 
        1947 (50 U.S.C. 3043b);
            (4) the annual report of the Department of Defense on 
        military and security developments involving the People's 
        Republic of China under section 1202 of the National Defense 
        Authorization Act for Fiscal Year 2000 (Public Law 106-65; 10 
        U.S.C. 113 note);
            (5) the annual Country Reports on Human Rights Practices of 
        the Department of State; and
            (6) facts otherwise disclosed and ascertained.
    (b) Findings.--Congress finds that investments in securities listed 
on certain securities exchanges in the People's Republic of China 
adversely affect the public interest of the United States and the 
interest of United States investors, in that, among other things--
            (1) the ideology, goals, and actions of the Chinese 
        Communist Party are inimical to the national security, economic 
        security, fundamental values, and liberty of the United States 
        and citizens of the United States;
            (2) all governmental, economic, business, and social 
        institutions in the People's Republic of China are effectively 
        instrumentalities of the Chinese Communist Party, as reflected 
        in the Party's charter, which states, ``Government, the 
        military, society and schools, north, south, east and west--the 
        party leads them all'', and are utilized by the Chinese 
        Communist Party to achieve its goals, paramount among which are 
        staying in power and vanquishing the United States as the 
        world's leading superpower;
            (3) among those institutions is the People's Liberation 
        Army, an instrumentality of the Chinese Communist Party 
        reporting to the Central Military Commission of the Chinese 
        Communist Party;
            (4) the core mission of the People's Liberation Army is to 
        sustain the Chinese Communist Party's grip on power, as was 
        demonstrated by the Chinese Communist Party's use of the 
        People's Liberation Army in putting down the pro-democracy 
        demonstrations of 1989;
            (5) the Chinese Communist Party is actively undermining the 
        national security of the United States through a massive 
        buildup of the military capabilities of the People's Liberation 
        Army and increasingly aggressive actions by military and 
        paramilitary actors;
            (6) the Chinese Communist Party supports the buildup of 
        those capabilities through a program of ``military-civil 
        fusion'' under which Chinese companies and researchers must 
        share technology and equipment with the Chinese military, with 
        the goal of ensuring that the People's Liberation Army achieves 
        global military dominance by 2049;
            (7) those companies, known as Chinese military industrial-
        complex companies, although often representing themselves as 
        private and civilian, are, in fact, directly supporting the 
        Chinese Communist Party's military, intelligence, and security 
        apparatuses and providing aid in their development and 
        modernization;
            (8) the Chinese military industrial-complex companies raise 
        substantial capital by selling securities to United States 
        institutional and individual investors;
            (9) the Chinese military industrial-complex companies 
        increasingly do so by listing their securities for sale on the 
        Shanghai and Shenzhen stock exchanges, which are self-
        proclaimed instrumentalities of the Chinese Communist Party and 
        are regulated by the China Securities Regulatory Commission, 
        which is also an instrumentality of the Chinese Communist 
        Party, and securities so listed are commonly referred to as 
        ``A-Shares'';
            (10) in addition to Chinese military industrial-complex 
        companies, those exchanges are replete with listings of 
        securities of--
                    (A) Chinese military industrial-complex companies 
                not included on United States sanctions lists;
                    (B) subsidiaries of such companies that are not 
                included on United States sanctions lists;
                    (C) companies denied access to United States 
                technology and equipment because those entities support 
                the development, production, and deployment of military 
                items for use by military end-users, including the 
                Chinese armed forces, national guard, national police, 
                and government intelligence organizations;
                    (D) companies specializing in advanced weapons 
                technologies that represent an unusual and 
                extraordinary threat to the national security of the 
                United States;
                    (E) companies managing the People's Republic of 
                China's nuclear weapons program and the expansion of 
                that program;
                    (F) companies building the People's Liberation Army 
                Air Force's next-generation fighters and bombers;
                    (G) companies central to the People's Republic of 
                China's naval buildup of aircraft carriers, surface 
                ships, and submarines;
                    (H) companies conducting the construction and 
                militarization of artificial islands in the South China 
                Sea; and
                    (I) companies involved in the development and use 
                of surveillance technology to facilitate repression and 
                egregious human rights abuses and advance the ideology 
                and strategic goals of the Chinese Communist Party 
                domestically and internationally;
            (11) investment of United States capital by United States 
        investors in the securities of companies listed on those 
        exchanges has increased dramatically through the inclusion of 
        those securities in indices published by major index providers 
        and in investment products tracking those indexes offered by 
        the most prominent asset managers in the United States;
            (12) investment of United States capital by United States 
        investors through those exchanges in the securities of those 
        companies, which directly support the efforts of the military, 
        intelligence, and other security apparatuses of the People's 
        Republic of China, and in other entities indirectly 
        contributing to the development of these apparatuses by their 
        contribution to the country's economy, presents an unusual and 
        extraordinary threat to the national security, foreign policy, 
        United States investor community, and economy of the United 
        States, constituting a national emergency;
            (13) investment of United States capital by United States 
        investors in securities listed on those exchanges also 
        supports, both indirectly through general economic support, and 
        directly through the operations of specific companies, the 
        Chinese Communist Party's ongoing engagement of widespread, 
        systematic, and egregious violations of human rights, 
        including--
                    (A) pursuit of a relentless campaign against the 
                Uyghurs in the Xinjiang Uyghur Autonomous Region in the 
                western People's Republic of China, characterized by 
                the United States Department of State as one of 
                genocide, involving forced labor, rape, compulsory 
                sterilization, and organ harvesting, all of which 
                continue, despite the enactment of the Act entitled 
                ``An Act to ensure that goods made with forced labor in 
                the Xinjiang Autonomous Region of the People's Republic 
                of China do not enter the United States market, and for 
                other purposes'', approved December 23, 2021 (Public 
                Law 117-78; 135 Stat. 1525) (commonly referred to as 
                the ``Uyghur Forced Labor Prevention Act''), which was 
                intended to block goods made with Uyghur forced labor 
                from entering the United States;
                    (B) continued pursuit of the decades-long campaign 
                to eradicate Tibet's unique religious, ethnic, 
                cultural, and linguistic identity, with Tibetans living 
                in a virtual police state and facing severe 
                restrictions of their human rights and fundamental 
                freedoms, including freedom of religion or belief;
                    (C) pursuit of a 5-year plan to bring all religious 
                doctrine and practice in line with Communist Party 
                doctrine, including forbidding youth from participating 
                in religious activities and implementation of mass 
                detention camps that indoctrinate detainees in Chinese 
                Communist Party ideology and force renunciation of 
                faith and subjecting individuals found violating the 
                laws and regulations controlling religion to 
                harassment, surveillance, interrogation, arrest, 
                beatings, sentences to prison, detention, or 
                disappearance;
                    (D) strict control of all domestic news reporting 
                and the telecommunications infrastructure, ensuring 
                that only information matching the Chinese Communist 
                Party's desired narrative is shared, through the 
                blocking of websites, mass deletion of posts and user 
                accounts, and imposition of severe punishment on those 
                who dare speak out;
                    (E) arbitrary arrest of those who do not conform to 
                Chinese Communist Party ideology, with those brave 
                enough to speak out subject to prolonged and secret 
                detention without access to legal counsel or the 
                ability to communicate with their families, and the use 
                of such arrests and the terror they deliberately 
                instill as tools in the Chinese Communist Party's 
                arsenal to maintain unchallenged power over people;
                    (F) operation of a factory system in which 
                occupational safety and health violations are prevalent 
                and working and living conditions in factories with 
                adjacent dormitories are tantamount to forced labor 
                camps, including, in the Xinjiang Uyghur Autonomous 
                Region, the subsidization by the Chinese Communist 
                Party of Chinese companies to set up factories near 
                detention camps in the region and to transfer camp 
                victims and others from rural areas to factories in 
                other parts of the region and throughout the People's 
                Republic of China to work as forced labor under the 
                guise of ``vocational training'' and ``poverty 
                alleviation'' programs; and
                    (G) imposition of a similar regime of systemic 
                repression on the people of Hong Kong, in violation of 
                promises to the contrary, including enactment of 
                draconian national security legislation that provides 
                for up to life in prison for the ambiguously defined 
                crimes of secession, subversion, terrorism, and 
                collusion with foreign powers, removal of books 
                critical of the Chinese Communist Party from bookstore 
                and library shelves, banning democratic political 
                slogans, and requiring schools to enforce censorship of 
                teachers and students;
            (14) investment of United States capital by United States 
        investors in securities listed on exchanges described in 
        paragraph (9) also benefits companies engaged in or benefitting 
        from the Chinese Communist Party's implementation, through 
        instrumentalities it controls, of unfair and malicious economic 
        and commercial practices, including--
                    (A) intellectual property theft and coerced 
                transfer of intellectual property in exchange for 
                market access;
                    (B) abuse of international trade rules and fora;
                    (C) campaigns to monopolize targeted industries and 
                destroy competitors via state subsidization of capital 
                and inputs, import protections and export incentives, 
                and exploitation of labor and the environment;
                    (D) appropriation of fishery and mineral rights of 
                other countries through means of intimidation and 
                coercion by military and paramilitary actors; and
                    (E) international exploitation and destruction of 
                mineral and fishery resources, and associated labor 
                abuses; and
            (15) investment of United States capital by United States 
        investors in securities listed on those exchanges also poses a 
        substantial, and intolerable, risk to United States investors 
        arising from--
                    (A) the refusal of the China Securities Regulatory 
                Commission to accept normal accounting standards in its 
                capital markets for any securities, preventing third-
                party auditors from knowing whether a Chinese company 
                is adhering to the generally accepted accounting 
                principles guidelines required of securities traded on 
                United States stock exchanges; and
                    (B) the failure of Chinese publicly traded 
                companies to engage in adequate material risk 
                disclosure, publish their financial information, 
                implement the rule of law, and adopt accepted corporate 
                governance standards.
    (c) Purposes.--The purposes of this Act are to mitigate and, to the 
extent feasible, to eliminate the conditions described in subsection 
(b), which adversely affect the public interest of the United States 
and the interests of United States investors.

SEC. 3. PROHIBITED ACTS.

    (a) Definitions.--In this section:
            (1) Acting in a professional capacity.--The term ``acting 
        in a professional capacity'' includes acting as--
                    (A) a member (as defined in section 3(a)(3)(A) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a)(3)(A))) of a national securities exchange;
                    (B) a member (as defined in section 3(a)(3)(B) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a)(3)(B))) of a registered securities association; 
                or
                    (C) an associated person of a member (as defined in 
                section 3(a) of the Securities Exchange Act of 1934 (15 
                U.S.C. 78c(a))) described in subparagraph (A) or (B).
            (2) Assignment.--The term ``assignment'' has the meaning 
        given the term in section 2(a) of the Investment Company Act of 
        1940 (15 U.S.C. 80a-2(a)).
            (3) Commerce.--The term ``commerce'' has the meaning given 
        the term in section 4 of the Federal Trade Commission Act (15 
        U.S.C. 44).
            (4) Covered exchange.--The term ``covered exchange'' 
        means--
                    (A) the Shanghai Stock Exchange (or any subsidiary 
                of that exchange);
                    (B) the Shenzhen Stock Exchange (or any subsidiary 
                of that exchange);
                    (C) the Beijing Stock Exchange (or any subsidiary 
                of that exchange); or
                    (D) any other national exchange, or subsidiary of 
                such an exchange, that is subject to the influence or 
                control of the Party Committee of the China Securities 
                Regulatory Commission, other than the Stock Exchange of 
                Hong Kong.
            (5) Covered security.--The term ``covered security'' means 
        a security that--
                    (A) as of the date on which a covered transaction 
                is executed with respect to the security, is listed on 
                a covered exchange;
                    (B) is derivative of a security described in 
                subparagraph (A); or
                    (C) is designed to provide investment exposure to a 
                security described in subparagraph (A).
            (6) Covered transaction.--The term ``covered transaction'' 
        means a purchase, sale, or assignment.
            (7) Engage in.--The term ``engage in'', with respect to a 
        transaction, means to order, approve, or otherwise perform any 
        act in furtherance of that transaction.
            (8) Purchase; sale; security.--The terms ``purchase'', 
        ``sale'', and ``security'' have the meanings given those terms 
        in section 3(a) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)).
            (9) U.S. person.--The term ``U.S. person'' has the meaning 
        given the term in section 120.62 of title 22, Code of Federal 
        Regulations, or any successor regulation.
            (10) Willfully.--The term ``willfully'', with respect to an 
        action, means that the action is taken voluntarily and 
        intentionally in violation of a known legal duty.
    (b) Prohibition.--
            (1) In general.--Except for the purposes of complying with 
        paragraph (2), beginning on the date of enactment of this Act, 
        it shall be unlawful for any U.S. person to make use of the 
        mails or any means or instrumentality of commerce to engage in 
        a covered transaction with respect to a covered security.
            (2) Divestment required.--Not later than 180 days after the 
        date of enactment of this Act, each U.S. person shall divest of 
        all covered securities held by the U.S. person.
    (c) Penalties.--A U.S. person that violates, attempts to violate, 
conspires to violate, or causes a violation of this section shall be 
subject to any of the following penalties:
            (1) A civil penalty in an amount not to exceed the greater 
        of--
                    (A) $250,000; or
                    (B) an amount that is twice the amount of the 
                covered transaction that is the basis of the violation 
                with respect to which the penalty is imposed.
            (2) With respect to a U.S. person that willfully violates, 
        willfully attempts to violate, willfully conspires to violate, 
        or willfully aids or abets in the commission of a violation of 
        this section, a criminal penalty as follows:
                    (A) If that U.S. person is an individual not acting 
                in a professional capacity, a fine of not more than 
                $1,000,000, a term of imprisonment of not more than 5 
                years, or both.
                    (B) If that U.S. person is an individual acting in 
                a professional capacity, a fine of not more than 
                $5,000,000, a term of imprisonment of not more than 20 
                years, or both.
                    (C)(i) If that U.S. person is an organization, 
                including any entity described in clause (ii), a fine 
                of not more than $25,000,000.
                    (ii) An entity described in this clause is any of 
                the following:
                            (I) An investment company, as defined in 
                        section 3 of the Investment Company Act of 1940 
                        (15 U.S.C. 80a-3).
                            (II) A bank, broker, dealer, exchange, 
                        insurance company, investment banker, 
                        underwriter, savings and loan association, 
                        business development company, commodity pool, 
                        commodity pool operator, commodity trading 
                        advisor, major swap participant, swap dealer, 
                        or swap execution facility, as those terms are 
                        defined in section 2(a) of the Investment 
                        Company Act of 1940 (15 U.S.C. 80a-2(a)).
                            (III) An investment adviser, as defined in 
                        section 202(a) of the Investment Advisers Act 
                        of 1940 (15 U.S.C. 80b-2(a)).
                            (IV) A market intermediary, as defined in 
                        section 3(c)(2)(B)(i) of the Investment Company 
                        Act of 1940 (15 U.S.C. 80a-3(c)(2)(B)(i)).
                            (V) A fund described in section 3(c)(10)(B) 
                        of the Investment Company Act of 1940 (15 
                        U.S.C. 80a-3(c)(10)(B)).
                            (VI) A qualified pension, profit-sharing, 
                        or stock bonus plan described in section 401 of 
                        the Internal Revenue Code of 1986.
                            (VII) An individual retirement account, as 
                        defined in section 408(a) of the Internal 
                        Revenue Code of 1986.
                            (VIII) A tax credit employee stock 
                        ownership plan, as defined in section 409(a) of 
                        the Internal Revenue Code of 1986.

SEC. 4. REPORTS TO CONGRESS.

    (a) In General.--In accordance with subsection (b), the Secretary 
of the Treasury, in consultation with the Secretary of Commerce, the 
Secretary of State, the Secretary of Defense, the Assistant to the 
President for National Security Affairs, and the Director of National 
Intelligence, shall submit to Congress a report on, for the period 
covered by the report--
            (1) the extent of mitigation and elimination of the 
        conditions described in section 2(b); and
            (2) the extent of the occurrence of the conditions 
        described in section 2(b) with respect to securities listed on 
        the Stock Exchange of Hong Kong.
    (b) Frequency of Submission.--The Secretary of the Treasury shall 
submit to Congress a report described in subsection (a)--
            (1) not later than 90 days after the date of enactment of 
        this Act;
            (2) not later than 180 days after the date of enactment of 
        this Act; and
            (3) once every 180 days after the date on which the 
        Secretary submits the report required under paragraph (2) of 
        this subsection.

SEC. 5. ANNUAL REPORT ON UNITED STATES PORTFOLIO INVESTMENTS IN THE 
              PEOPLE'S REPUBLIC OF CHINA.

    (a) Definitions.--In this section:
            (1) Chinese entity.--The term ``Chinese entity'' means an 
        entity organized under the laws of the People's Republic of 
        China or otherwise subject to the jurisdiction of the 
        Government of the People's Republic of China.
            (2) United states person.--The term ``United States 
        person'' means--
                    (A) a United States citizen or an alien lawfully 
                admitted for permanent residence to the United States; 
                or
                    (B) an entity organized under the laws of the 
                United States or any jurisdiction within the United 
                States, including a foreign branch of such an entity.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, and annually thereafter, the Secretary of the Treasury shall 
submit to Congress a report on portfolio investments by United States 
persons in the People's Republic of China, including such investments 
routed through a jurisdiction outside the United States.
    (c) Elements.--Each report required by subsection (b) shall include 
an assessment of the involvement of the following in portfolio 
investments in the People's Republic of China:
            (1) United States persons making such investments, 
        including an assessment of--
                    (A) the types of United States persons making such 
                investments, including State pension funds; and
                    (B) United States persons making more than 2 
                percent of the total of such investments in a year.
            (2) Chinese entities receiving such investments, including 
        an assessment of--
                    (A) such entities in individual sectors of the 
                economic of the People's Republic of China, including 
                the housing sector;
                    (B) any Chinese entities subject to sanctions 
                imposed by the United States receiving such 
                investments; and
                    (C) Chinese entities that receive more than 
                $100,000,000 from such investments.
    (d) Period Covered.--The period covered by a report required by 
subsection (b) shall be--
            (1) in the case of the first such report, the period 
        beginning on January 1, 2008, and ending on the date of the 
        report; and
            (2) in the case of each subsequent such report, the 1-year 
        period preceding submission of the report.

SEC. 6. COORDINATION.

    (a) In General.--The Secretary of the Treasury and the Securities 
and Exchange Commission may coordinate to carry out this Act.
    (b) Coordination on Imposition of Criminal Penalties.--For the 
purposes of carrying out section 3(c)(2), the Secretary of the Treasury 
and the Securities and Exchange Commission may coordinate with the 
Attorney General.
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