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French Hill: US Should Take ‘Targeted’ Approach to Oversight of Outbound Investments

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Republican U.S. Rep. French Hill of Arkansas is not opposed to passing legislation that would prevent American companies from investing in Chinese enterprises that develop specific types of technologies that could threaten American intelligence operations or security interests.

The lawmaker said recent reports that he is against government scrutiny of outbound investments by American companies to China have misrepresented his stance. It has been “completely misreported,” he said.

“I am not opposed to it,” Hill said on the sidelines of a House Financial Services Committee hearing held Friday at the Venture Center in Little Rock. “No one is opposed to outbound scrutiny of investments in China. No one. It’s how do you do it? The Senate bill doesn’t do it in an adequate way.” 

Hill signed off on Nov. 29 letter from the House Financial Services Committee to the Senate Armed Services Committee opposing provisions in a Senate-passed National Defense Authorization Act, or NDAA, that would require the U.S. private sector to undergo screening of investments in high-tech businesses in China, Iran, North Korea, and Russia. 

The Senate approved the outbound private investment provision, Section 1085 to the NDAA, 91-6. But Hill said it is too broad and would be impossible to implement. “Theirs is an across-the-board interagency approach that sweeps up all technologies across all companies,” he said. “I think that is highly impractical.” 

Hill said the House Financial Services Committee is drafting legislation that would increase outbound scrutiny but would be more limited in scope, targeting investments specifically in firms involved with technology that could pose national security threats. 

“No one is soft on China. No one is soft on not reviewing these investments, but the question is what is the best way to do it legally?” the lawmaker said. “The approach we have taken is much more targeted in dual-use technology that could be used for intelligence or security purposes. It proposes a list so then [U.S. companies] know they can’t do it. It’s not open-ended like the approach the Senate took.” 

“While we appreciate the intentions and objectives of Section 1085, the result of this provision would be to strengthen rather than weaken the objectives of [Chinese President] Xi Jinping and the Chinese Communist Party,” the Nov. 29 letter said, adding the provision would “have unintended consequences of limiting Americans’ control, influence, and intelligence gathering in Chinese technology companies.” 

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