The Scoop
Sen. John Cornyn on Thursday plans to reintroduce a bipartisan proposal to scrutinize US investments in China — this time, with a long list of new backers, the Texas Republican tells Semafor.
Cornyn had previously partnered with former Sen. Bob Casey, D-Pa., and Sen. Dan Sullivan, R-Alaska, on related efforts. Now Nevada Sen. Catherine Cortez Masto will serve as his Democratic lead. Cornyn’s dozen other allies in the effort include Senate Minority Leader Chuck Schumer, D-N.Y., and both parties’ leaders on the Banking Committee: Chair Tim Scott, R-S.C., and ranking member Elizabeth Warren, D-Mass.
The text of the bill, viewed by Semafor, parallels China hawks’ push at the end of last year to require Americans to notify the Treasury Department when they make certain investments in key Chinese tech industries like artificial intelligence — essentially codifying a Biden administration executive order, after President Donald Trump signed a related edict last month.
The new Senate proposal would also empower the Treasury secretary to block a longer list of related investments and to sanction some Chinese firms that partner with Beijing. That provision would effectively leave further curbs up to the White House, a shift that comes after the private sector quietly raised concerns with Congress’ initially more binding language.
“The need to address capital flowing from the U.S. to bad actor nations was first realized during the first Trump administration, and I look forward to finishing what we started then by getting this vital priority over the finish line,” Cornyn said in a statement.
What happens next will effectively set the table for how this Congress tackles China policy during Trump’s second term. The president has already doubled tariffs on Chinese imports, sparking retaliatory restrictions in a no-holds-barred trade war that has banks, farmers, retailers, and even GOP policymakers squirming.
In a sign of fault lines to come, the House has yet to publicly coalesce around its preferred path forward on so-called outbound investment.
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Lawmakers came very close to passing limits on US investment in China as part of a year-end deal in December. A working group of House Republicans worked for months on a compromise between then-House Financial Services Chair Patrick McHenry, R-N.C., and China hawks like then-House Foreign Affairs Chair Michael McCaul, R-Texas; the first version of their legislation kicked off weeks of text-trading with the Senate, as congressional leaders looked to build bipartisan momentum for an agreement that could pass before 2025.
Over McHenry’s sustained opposition, the outbound investment curbs were added to annual defense legislation and, after they got axed in an unrelated Democratic hardball attempt, a short-term spending bill. But that deal also disintegrated as Republicans faced pressure to narrow the spending patch dramatically.
Also signing onto Cornyn’s new outbound investment bill: Sens. Jim Banks, R-Ind., Elissa Slotkin, D-Mich., Pete Ricketts, R-Neb., Michael Bennet, D-Colo., Bill Hagerty, R-Tenn., Andy Kim, D-N.J., Dave McCormick, R-Pa., and John Fetterman, D-Pa.
The View From The House
House Speaker Mike Johnson privately discussed US-China investment on Monday with new Financial Services Chair French Hill, R-Ark., and new Foreign Affairs Chair Brian Mast, R-Fla., as well as House China committee leader Rep. John Moolenaar, R-Mich., according to a person familiar with the meeting.
Also in attendance was a key architect of last year’s proposal, Rep. Andy Barr, R-Ky., plus Rep. Warren Davidson, R-Ohio. Both chair relevant subpanels on the Financial Services Committee.
“We are making progress,” Davidson told Semafor later in the week. “We’re optimistic we’ll get an outbound regulatory framework, and we’re working on details.”
But those details remained elusive this week, even as the Senate pushed ahead with Cornyn’s plan — and they don’t seem likely to materialize until Trump weighs in. Moolenaar told Semafor as he left Monday’s meeting that the White House is conducting a review of the legislation that “should be done in April.”
“We’re just working to understand how we can get this done — House, Senate, White House — in a bipartisan way,” Moolenaar said. “I wouldn’t put a timeframe on it. I would just say that we’re having the discussions, and there’s a lot on the agenda right now.”
Eleanor’s view
The Senate’s decision to not wait on the House before advancing its US-China investment proposal underscores how far Congress is from reaching a consensus — and in turn, how pivotal it will be for the Trump administration to weigh in on what it wants from a bill.
Without that guidance, a repeat of last year’s wobbling over the bill seems inevitable.
At least one hurdle seems to have been cleared: private-sector resistance. Cornyn’s new legislation is a much less stringent version than the one the House working group first drafted last year — so it’s highly unlikely that multinational firms put up the same fight against it.
Notable
- The incoming Trump administration was already shaping the proposed restrictions on U.S.-China investment, despite providing lawmakers with little guidance, Eleanor wrote in December.
- Chinese authorities are probing Walmart executives following reports that the chain asked Chinese suppliers for discounts to compensate for new tariffs, Bloomberg reports.