In a significant move reflecting growing concerns over national security, US lawmakers have introduced the Comprehensive Outbound Investment National Security (COINS) Act. Spearheaded by Chairperson John Moolenaar (R-MI) and Rep. Andy Barr (R-KY), the legislation aims to limit US investments in Chinese sectors linked to military growth and human rights violations. This initiative seeks to safeguard American savings and retirement funds from being funneled into companies that pose threats to the United States [6232ddaa].
The COINS Act comes in response to alarming investigations that revealed over USD 1.9 billion from American venture capital firms directed towards Chinese AI companies and USD 1.2 billion invested in China's semiconductor industry, both of which are associated with military modernization efforts [6232ddaa]. A Senate companion bill has been introduced by Senators John Cornyn (R-TX) and Tim Scott (R-SC), further emphasizing the bipartisan concern regarding investments that could undermine US national security [6232ddaa].
This legislative effort follows a report from the Select Committee published a year ago, which highlighted the risks posed by American capital flowing into sectors that could potentially harm US interests. Sarah Bauerle Danzman, an expert on US-China economic relations, previously testified before the US-China Economic and Security Review Commission, noting that the United States remains the primary overseas investor in China, primarily through venture capital, although these flows have been declining [58b21f7c].
Danzman underscored the importance of maintaining outbound regulation as a notification/prohibition regime and advocated for a sector-based approach to outbound investment regulation. She also recommended providing a statutory basis for the NS-CMIC list, which identifies Chinese entities operating in sectors critical to US national security [58b21f7c].
In her testimony, Danzman outlined key implementation challenges and offered recommendations to Congress, urging them to avoid adding non-national security-related tests to outbound investment legislation. She emphasized the need for clarity regarding 'routine intracompany actions' and suggested modifications to the CMIC program to broaden the scope of designated Chinese entities [58b21f7c]. The introduction of the COINS Act marks a pivotal moment in the ongoing dialogue about the intersection of US investment strategies and national security concerns regarding China.