US security focus on Chinese state ownership is not productive, advisory panel is told
- Look into the companies’ technologies and services, not links to Beijing, experts tell members of the US-China Economic and Security Review Commission
- ‘US efforts to regulate Chinese companies based on ownership are doomed to fail,’ analyst says
The US should have more flexible rules to define which Chinese companies have military ties and move away from forcing firms to disclose government connections, financial market experts told a congressional advisory panel on Friday.
“Congress should amend the laws by instituting a reasonable cause to believe that the entity in question is working with or poses a significant risk of working with a Chinese military industrial complex,” said Nazak Nikakhtar of the international trade and national security practice at law firm Wiley Rein, at a hearing of the US-China Economic and Security Review Commission (USCC).
“This would be a far more flexible standard and reduces the record building burden on the US government,” said Nikakhtar, former assistant secretary of commerce for industry and analysis under the Trump administration. “We need to be nimble when responding to national security threats.”
The hearing comes as China lures an increasing amount of US investment into its capital markets, while the US has tightened its restrictions on China. Washington is concerned American capital can be used to help advance China’s military.
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Members of the USCC, which studies the national security implications of trade and economic relationships, were advised that the current approach to force Chinese companies to disclose their relationship with Chinese government was not productive.
