Overview
On March 13, 2025, Senator John Cornyn (R-TX), introduced the Foreign Investment Guardrails to Help Thwart (FIGHT) China Act, intended to curb outbound US investment in critical technologies for the purpose of safeguarding the United States’ national security against the growing threat posed by the People’s Republic of China (PRC). The bill would prohibit US investments in the development or production of covered Chinese technologies and require notification to the Department of Treasury of any US investments in non-prohibited technologies. Coming amid heightened tensions in the bilateral relationship and a looming trade war, the measure (which is co-sponsored by Democratic Senators, including Minority Leader Chuck Schumer) represents a solidified consensus on the national security risks of doing business with China—and foreshadows additional considerations for multinationals in this new trade environment.
The FIGHT China Act
The FIGHT China Act—the full text of which was not released as of this writing—is intended to strengthen the US’ framework for screening and blocking outbound investments to China that could threaten US national security, such as investments in AI, advanced semiconductors, quantum systems and hypersonics. The bill is supported by a bipartisan group of senators, including Catherine Cortez Masto (D-NV), Jim Banks (R-IN), Pete Ricketts (R-NE), Michael Bennet (D-CO), Bill Hagerty (R-TN), Andy Kim (D-NJ), Dave McCormick (R-PA), Chuck Schumer (D-NY), and Dan Sullivan (R-AK), along with Senate Banking, Housing, and Urban Affairs Committee Chairman Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA).
The FIGHT China Act has been referred to the Senate Committee on Banking, Housing, and Urban Affairs. Although the proposed Act has not yet been made available to the public by the Government Publishing Office, various Senatorial press releases further describe the Act as follows:
Investments Covered:
- Acquisitions, including of limited partners, equity interest, property, or other assets
- Loans and debt financing
- Joint ventures
- Equity interest or debt conversions
The legislation would establish exemptions for:
- Transactions determined to be de minimis or in the national interest
- Investments in securities, derivatives of securities, or made as a limited partner in a venture
- Capital fund, private equity fund, fund of funds, or other pooled investment fund
- Ancillary transactions undertaken by a financial institution
- Acquisitions of entire assets or entities located outside the PRC
- Certain transactions secondary to a covered national security transaction
- Certain ordinary or administrative business transactions.
Prohibited Covered Investments:
- Certain advanced integrated circuits
- Certain AI models capable of a high number of operations
- Quantum computers and supercomputers
- Materials or components for hypersonics
- Any of these technologies that are on the Munitions List, intended for use with nuclear equipment or facilities, or emerging technologies subject to export controls
Notification to the US Department of the Treasury must be made within 14 days when making a covered investment in the PRC for the development or production of any non-prohibited integrated circuit; and any non-prohibited AI system that is used for military, surveillance, cybersecurity, penetration, forensics, or robotic system use or which meets a certain computing standard.
This bill, as described by its sponsors, is similar to bills previously introduced by Senator Cornyn and Congressman Andy Barr (R-KY) in December 2024, which were derailed over the larger government funding dispute. The previous House Bill was co-sponsored by House Select Committee on the Communist Chinese Party Chair John Moolenaar (R-MI), indicating likely receptivity to the new bill and the possibility of mirror legislation in the House to expedite the Act’s consideration and passage in both Houses of Congress.
Business Risks amid Heightened Economic Tensions
The FIGHT China Act—and its broad bipartisan support—is indicative of the broader shift in sentiments around doing business with China as geopolitical rivalry between Washington and Beijing heats up. The China doctrine of the last decade—in which economic cooperation could coexist with geostrategic competition—is no longer. Today, economic security is national security and selective economic decoupling is well underway. The year has already been marked by high-profile attempts by the White House to prevent China from influencing or accessing American critical technologies, gaining a technological edge, or benefiting from historic dominance in some technological sectors.
The bill is consistent with President Trump’s recently released National Security Presidential Memorandum describing his “America First Investment Policy,” which calls for (among other measures) additional restrictions on US companies’ business activities with and investment in Chinese industries that advance China’s national Military-Civil Fusion Strategy. The memorandum also calls for a shift in CFIUS’ priorities to restricting investment from “foreign adversaries,” particularly China. In January of this year, the Treasury Department’s new outbound investment rule took effect, which curtails investments by US persons to individuals and entities in China in key technology sectors with the goal of preventing US investments from even indirectly supporting military, cybersecurity and surveillance advancements by the PCR. Businesses with investments in China should pay attention to these legislative efforts and broader regulatory developments as they further sharpen the US government focus from limiting technology investments in certain technology sectors to prohibitions on investments in specific technologies.
