Legislation forces US firms to prepare for a Taiwan war

Asia Times -  Some American legislators have proposed a bipartisan legislative bill that will require United States-listed firms to disclose their assets and businesses in the People’s Republic of China (PRC) and estimate the economic losses they will suffer if China invades Taiwan. 

The PRC Risk Transparency Act, if passed and implemented, will amend the Securities Exchange Act of 1934 to require US-listed firms to annually disclose the percentage of total revenue, profits, capital investment and supply chain involvement in China and perform security analysis related to their exposures. 

The Act will require US-listed firms to make plans for a sudden loss of market access in China if the country invades Taiwan, a self-governing island over which Beijing claims to have sovereignty and has vowed to “reunite” with the mainland. 

These firms need to consider different case scenarios including a more than 80% decline in bilateral trade between the US and China, a complete cessation in the trade of goods with military end-use or dual-use applications and an extreme situation in which Beijing seizes all China-based assets of American companies that could be repurposed for military production. 

The bill was jointly introduced by the House Financial Service Subcommittee on National Security, Illicit Finance and International Financial Institutions chairman Blaine Luetkemeyer and the Select Committee on the Chinese Communist Party chairman John Moolenaar on July 25. 

The bill needs approval from both the US House of Representatives and Senate and the US president’s signature in order to become law. 

A spokesperson of Luetkemeyer’s office told the media that another way to push the legislation is to add this Act, together with the previously proposed Chinese Military Aggression Act, to House Speaker Mike Johnson’s coming legislation package, which aims to restrict US investments in China and punish the Chinese firms that provide material support to Russia and Iran.

Johnson said in early July that Congress targets to pass a significant legislation package by the end of this year to curb China as the country now leading an “axis” of adversaries that includes Russia, Iran, North Korea, Venezuela and Cuba. 

John Aquilino, head of the Indo-Pacific Command, said in March that he believes China’s military will be prepared to invade Taiwan by 2027. 

In April, Luetkemeyer introduced the Chinese Military Aggression Act, which will direct the Treasury Department’s Financial Stability Oversight Council (FSOC) to analyze, study and report on market implications and vulnerabilities related to a Chinese invasion of Taiwan.

The PRC Risk Transparency Act was proposed two days before US State Secretary Antony Blinken met with Chinese Foreign Minister Wang Yi on the sidelines of the ASEAN Foreign Ministers’ meeting in Laos on July 27. 

During the meeting, Blinken expressed concerns over China’s support for Russia’s war in Ukraine and provocative actions against Taiwan. 

Wang countered that Taiwanese separatists are the ones creating trouble in the Taiwan Strait and that China will not hesitate to take countermeasures. He said the US has been trying to alienate Beijing and Moscow since the Russian-Ukrainian conflict broke out but China will not back down under external pressure. 

A Shanxi-based Chinese columnist says in an article published on Monday that Wang has already seen through Blinken’s tricks – Washington wanted to increase communications with Beijing but would not stop suppressing China. 

He says it was probably the last time for Blinken to visit Asia with the title of US State Secretary. He says Blinken may not be able to stay in his position after the US presidential election in November.