Bill restricting US contracts with Chinese biotech firms among first to pass House in ‘China Week’

In the first legislative moves of “China week“, the US House passed a bill on Monday that would restrict the federal government from contracting with Chinese biotech firms involved in the US medical supply chain, along with over a dozen bills targeting Beijing’s political, economic and technological influence.

Meant to encourage US firms to reduce their reliance on Chinese manufacturing and limit the risk of American health data going to Beijing, the bill – a version of which has cleared a Senate committee – has faced backlash from biotech executives who contend it could contribute to widespread drug shortages in the US.

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In response, lawmakers had extended the deadline for halting existing contracts with the named Chinese firms to January 2032.

Having enjoyed bipartisan support, it was not expected to face hurdles on the House floor. But Democratic congressman Jim McGovern of Massachusetts cast doubt on the process used for determining the list of targeted companies, and garnered the support of House Democratic leadership in voting against the bill.

“If we’re going to name companies, there ought to be a clear, transparent process,” said McGovern, whose district is home to a facility that Wuxi Biologics is building.

McGovern, a human-rights hawk serving on the Congressional Executive Commission on China, said he could not get a straight answer from the bill’s sponsors about why the companies were on the list. He called for more evidence to show that the companies had been exploiting the American pharmaceutical industry on behalf of the Chinese government.

All bills that pass the House must also clear the Senate before they can be sent to the president’s desk to be signed into law. Votes and debates were ongoing on Monday night. More votes are expected later in the week.

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Meanwhile, voting on a bipartisan bill that could close Hong Kong‘s diplomatic offices in the US was postponed until later in the week.

Republican congressman Chris Smith of New Jersey sponsored the bill on Hong Kong. Photo: Bloomberg alt=Republican congressman Chris Smith of New Jersey sponsored the bill on Hong Kong. Photo: Bloomberg>

The Hong Kong Economic and Trade Office Certification Act would require the US secretary of state to review the city’s three American trade missions – in New York, San Francisco and Washington – and strip them of privileges if they are found not to operate with a “high degree of autonomy” from the People’s Republic of China.

“At one time, the Hong Kong economic and trade offices in the United States represented a city whose prosperity was based on its protection of fundamental human rights and freedom of the Hong Kong people,” said Chris Smith, Republican of New Jersey, the bill’s sponsor, during floor debate on Monday.

“But three years after the [Chinese Communist Party] imposed the national security law on Hong Kong … the Hong Kong all of us knew, loved and respected, is gone,” he continued.

Tech was another focus of Monday’s votes.

The Countering CCP Drones Act, which would add China-based drone manufacturer DJI Technologies to a national-security list operated by the Federal Communications Commission, passed by voice vote.

Democratic congressman Jim McGovern of Massachusetts is a human-rights hawk. Photo: Getty Images via AFP alt=Democratic congressman Jim McGovern of Massachusetts is a human-rights hawk. Photo: Getty Images via AFP>

That bill would restrict new products from the company from operating on US communications infrastructure.

Other tech-related bills that passed Monday focused on improving transparency on the risks of foreign-made routers and other telecommunications infrastructure.

The House also passed a bill adding the drone maker DJI Technologies to a list of providers of telecommunications and video equipment considered a risk to US national security. Photo: Getty Images via AFP alt=The House also passed a bill adding the drone maker DJI Technologies to a list of providers of telecommunications and video equipment considered a risk to US national security. Photo: Getty Images via AFP>

A bill that would create a fund for media, research and civil society projects to oppose Chinese influence passed 351-36.

But even as the first votes took place, observers noted that some of the most highly anticipated China-related legislation did not make the cut for floor consideration.

“House leadership seems to have carefully balanced advancing some very tough-on-China measures while deliberately sidestepping some of the more regulatory, heavy bills currently being debated on Capitol Hill,” said Craig Singleton of the China programme at The Foundation for Defence of Democracies.

These bills included one restricting outbound investment to China and another that would close what advocates have called the “de minimis loophole”, a policy allowing imported packages that fell below a certain price threshold to receive less oversight in the US customs process.

The investment restriction has faced opposition from Republican congressman Patrick McHenry of North Carolina, the outgoing chairman of the House Financial Services committee, who argues that it would dampen US influence in corporate China.

According to Singleton, changing the de minimis rule could increase the price on consumer goods, making it potentially untenable on the campaign trail ahead of the November elections.

But he added that both the de minimis and outbound investment bills may resurface in the “lame-duck” session, which occurs after the November elections and before the new US president is sworn in next January.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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