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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5571 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 5571

  To impose sanctions with respect to foreign persons that knowingly 
 engage in significant operations in the defense and related materiel 
  sector or the surveillance technology sector of the economy of the 
          People's Republic of China, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

            December 17 (legislative day, December 16), 2024

  Mr. Scott of Florida introduced the following bill; which was read 
  twice and referred to the Committee on Banking, Housing, and Urban 
                                Affairs

_______________________________________________________________________

                                 A BILL

 
  To impose sanctions with respect to foreign persons that knowingly 
 engage in significant operations in the defense and related materiel 
  sector or the surveillance technology sector of the economy of the 
          People's Republic of China, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Chinese Military and Surveillance 
Company Sanctions Act of 2024''.

SEC. 2. FINDINGS AND SENSE OF CONGRESS.

    (a) Findings.--Congress finds the following:
            (1) Under Executive Order 13959 of November 17, 2020, the 
        President found that the People's Republic of China ``increases 
        the size of the country's military-industrial complex by 
        compelling civilian Chinese companies to support its military 
        and intelligence activities. Those companies, though remaining 
        ostensibly private and civilian, directly support the PRC's 
        military, intelligence, and security apparatuses and aid in 
        their development and modernization.''. The President further 
        determined that ``the PRC exploits United States investors to 
        finance the development and modernization of its military.''. 
        As a result, Executive Order 13959 restricted transactions in 
        publicly traded securities of Communist Chinese military 
        companies listed pursuant to section 1237 of the Strom Thurmond 
        National Defense Authorization Act for Fiscal Year 1999 (Public 
        Law 105-261; 50 U.S.C. 1701 note).
            (2) Although Executive Order 13959 targets transactions in 
        some public securities, it does not fully address all public 
        securities of concern or address financing options for 
        Communist Chinese military companies through other forms of 
        equity financing or debt financing, nor does it limit 
        transactions with United States persons that may generate 
        earnings in a manner that facilitates company growth.
            (3) The Office of Foreign Assets Control of the Department 
        of the Treasury, by blocking the assets of certain entities 
        pursuant to certain specific delegated authorities and 
        including those entities on the list of specially designated 
        nationals and blocked persons (commonly referred to as the 
        ``SDN list''), is able to forbid virtually any transaction 
        between United States persons and such entities, including debt 
        and equity financing and the exchange of goods and services. 
        Conversely, restrictions limited to publicly traded securities 
        are less comprehensive, and in the case of certain Chinese 
        companies of concern, may be of limited impact if the companies 
        do not issue such securities or the full corporate family is 
        not adequately covered.
            (4) While Executive Order 13959 applies only to the 
        purchase or sale of certain publicly traded securities by 
        United States persons, the Office of Foreign Assets Control's 
        inclusion of a foreign entity on the SDN list imposes a broader 
        sanction by blocking the property and interest in property of 
        the entity, which may further deter third-country persons from 
        dealing with it, amplifying the effects of United States 
        sanctions globally.
            (5) The Office of Foreign Assets Control has long devoted 
        significant resources to compiling evidence in support of its 
        sanctions, which enhances the effectiveness of United States 
        sanctions, encourages allies to consider comparable measures, 
        and strengthens national security.
            (6) On June 3, 2021, the President issued Executive Order 
        14032, which amended Executive Order 13959 by exclusively 
        delegating authority for naming Chinese military companies 
        subject to investment restrictions to the Secretary of the 
        Treasury, in consultation with the Secretary of State and, as 
        appropriate, the Secretary of Defense, and expanded 
        restrictions to entities that operate or have operated in the 
        surveillance technology sector of the Chinese economy.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) it is in the national interest of the United States to 
        more fully address the economic threat that the Chinese 
        Communist Party poses to United States freedom and prosperity;
            (2) the United States must adopt policies that declare and 
        defend the interests of the United States and deter the 
        aggression of the Chinese Communist Party; and
            (3) the national emergency declared under Executive Order 
        13959 calls for the United States--
                    (A) to more fully cut off financing avenues for 
                Communist Chinese military and surveillance companies;
                    (B) to prevent adaptation by a company to partial 
                restrictions that are limited to publicly traded 
                securities;
                    (C) to ensure that the United States assembles an 
                appropriate evidentiary basis to support the 
                effectiveness of sanctions;
                    (D) to enhance the impact of economic sanctions by 
                deterring third-country persons from dealing with the 
                companies; and
                    (E) to link the imposition of sanctions to clear 
                objectives that serve to resolve the national 
                emergency.

SEC. 3. SANCTIONS WITH RESPECT TO COMMUNIST CHINESE MILITARY AND 
              SURVEILLANCE COMPANIES.

    (a) In General.--On and after the date that is 180 days after the 
date of the enactment of this Act, the President shall impose the 
sanction described in subsection (c) with respect to any foreign person 
described in subsection (b).
    (b) Foreign Person Described.--A foreign person described in this 
subsection is any foreign person the President determines is knowingly 
operating in the defense sector, military-civil fusion operations 
sector, or surveillance technology sector of the economy of the 
People's Republic of China.
    (c) Sanction Described.--The President shall prohibit any 
transactions in foreign exchange that are subject to the jurisdiction 
of the United States and in which the foreign person described in 
subsection (b) has any interest.
    (d) Additional Measure Relating to Facilitation of Certain 
Transactions.--The President shall prohibit or impose strict conditions 
on the opening or maintaining in the United States of a correspondent 
account or payable-through account by a foreign financial institution 
that the President determines has, on or after the date that is 180 
days after the date of the enactment of this Act, knowingly conducted 
or facilitated a significant transaction or transactions on behalf of a 
foreign person described in subsection (b).
    (e) Congressional Requests.--Not later than 30 days after receiving 
a request from the chairman or ranking member of one of the appropriate 
congressional committees with respect to whether a person meets the 
criteria for the imposition of sanctions under subsection (c) or (d), 
the President shall--
            (1) determine if the person meets such criteria; and
            (2) submit a report to the chairman or ranking member, as 
        the case may be, who submitted the request with respect to that 
        determination that includes a statement of whether or not the 
        President imposed or intends to impose sanctions with respect 
        to the person.
    (f) Determinations and Reports.--
            (1) In general.--Not later than one year after the date of 
        the enactment of this Act, and annually thereafter, the 
        Secretary of the Treasury, in consultation with the Secretary 
        of State, the Secretary of Commerce, and the Secretary of 
        Defense, shall--
                    (A) determine whether each foreign person on a list 
                specified in paragraph (2), and each entity described 
                in paragraph (3), meets the criteria for the imposition 
                of sanctions under subsection (c) or (d); and
                    (B) submit to the appropriate congressional 
                committees a report explaining the results of each such 
                determination.
            (2) Lists specified.--The lists specified in this paragraph 
        are the following:
                    (A) The Consolidated Screening List of the Federal 
                Government.
                    (B) The list of Chinese military companies 
                operating directly or indirectly in the United States 
                maintained by the Secretary of Defense under section 
                1260H(b) of the William M. (Mac) Thornberry National 
                Defense Authorization Act for Fiscal Year 2021 (Public 
                Law 116-283; 10 U.S.C. 113 note).
                    (C) A list maintained under clause (i), (ii), (iv), 
                or (v) of section 2(d)(2)(B) of the Act entitled ``An 
                Act to ensure that goods made with forced labor in the 
                Xinjiang Autonomous Region of the People's Republic of 
                China do not enter the United States market, and for 
                other purposes'', approved December 23, 2021 (Public 
                Law 117-78; 22 U.S.C. 6901 note) (commonly referred to 
                as the ``Uyghur Forced Labor Prevention Act'').
            (3) Entities described.--An entity is described in this 
        paragraph if the entity produces equipment or services on the 
        list of communications equipment and services that pose an 
        unacceptable risk to the national security of the United States 
        or the security and safety of United States persons maintained 
        by the Federal Communications Commission under section 2 of the 
        Secure and Trusted Communications Networks Act of 2019 (47 
        U.S.C. 1601).
    (g) Consideration of Certain Activities.--In making determinations 
with respect to the imposition of sanctions under subsection (c) or 
(d), the Secretary of the Treasury may, if practicable, focus 
particular attention on foreign persons engaged in any of the 
following:
            (1) Artificial intelligence, machine learning, autonomy, 
        and related advances.
            (2) High-performance computing, semiconductors, and 
        advanced computer hardware and software.
            (3) Quantum information science and technology.
            (4) Robotics, automation, and advanced manufacturing.
            (5) Advanced communications technology and immersive 
        technology.
            (6) Biotechnology, medical technology, genomics, and 
        synthetic biology.
            (7) Data storage, data management, and cybersecurity, 
        including biometrics.
            (8) Advanced materials science, including composites and 2 
        dimensional materials.
            (9) Hypersonic flight technologies for glide or any other 
        purposes.
            (10) Space-related technologies, including satellite 
        communications.
            (11) Aviation and aerospace technologies.
            (12) Any other area on the Critical and Emerging 
        Technologies List of the National Science and Technology 
        Council.
    (h) Implementation; Penalties.--
            (1) Implementation.--The President may exercise the 
        authorities provided under sections 203 and 205 of the 
        International Emergency Economic Powers Act (50 U.S.C. 1702 and 
        1704) to the extent necessary to carry out this section.
            (2) Penalties.--A person that violates, attempts to 
        violate, conspires to violate, or causes a violation of this 
        section or any regulation, license, or order issued to carry 
        out this section shall be subject to the penalties set forth in 
        subsections (b) and (c) of section 206 of the International 
        Emergency Economic Powers Act (50 U.S.C. 1705) to the same 
        extent as a person that commits an unlawful act described in 
        subsection (a) of that section.
    (i) Waiver.--
            (1) In general.--The President may, for renewable periods 
        of not to exceed 180 days, waive the application of this 
        section with respect to a foreign person if the President 
        certifies to the appropriate congressional committees that such 
        a waiver is in the national security interests of the United 
        States.
            (2) Briefing.--Not later than 90 days after the issuance of 
        a waiver under paragraph (1), and every 180 days thereafter 
        while the waiver remains in effect, the President shall brief 
        the appropriate congressional committees on the reasons for the 
        waiver.
    (j) Exceptions.--
            (1) Intelligence and law enforcement activities.--Sanctions 
        under this section shall not apply with respect to--
                    (A) any activity subject to the reporting 
                requirements under title V of the National Security Act 
                of 1947 (50 U.S.C. 3091 et seq.); or
                    (B) any authorized intelligence or law enforcement 
                activities of the United States.
            (2) Humanitarian activities.--The President may not impose 
        sanctions under this section with respect to any person for 
        conducting or facilitating a transaction for the sale of 
        agricultural commodities, food, medicine, or medical devices or 
        for the provision of humanitarian assistance.
    (k) Regulatory Requirements.--
            (1) In general.--The President shall, not later than 180 
        days after the date of the enactment of this Act, prescribe 
        such regulations as are necessary for the implementation of 
        this section.
            (2) Notification to congress.--Not later than 10 days 
        before prescribing regulations under paragraph (1), the 
        President shall notify the appropriate congressional committees 
        regarding the proposed regulations and the provisions of this 
        section that the regulations are implementing.
    (l) Sunset.--The authority to impose sanctions under this section 
shall terminate on the date that is 7 years after the date of the 
enactment of this Act.
    (m) Definitions.--In this section:
            (1) Account; correspondent account; payable-through 
        account.--The terms ``account'', ``correspondent account'', and 
        ``payable-through account'' have the meanings given those terms 
        in section 5318A of title 31, United States Code.
            (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on Armed Services, the Committee 
                on Banking, Housing, and Urban Affairs, the Committee 
                on Foreign Relations, and the Committee on Homeland 
                Security and Governmental Affairs; and
                    (B) the Committee on Armed Services, the Committee 
                on Financial Services, the Committee on Foreign 
                Affairs, and the Committee on Homeland Security of the 
                House of Representatives.
            (3) Executive order 13959.--The term ``Executive Order 
        13959'' means Executive Order 13959 (50 U.S.C. 1701 note; 
        relating to addressing the threat from securities investments 
        that finance Communist Chinese military companies), as in 
        effect on the date of the enactment of this Act, including as 
        most recently amended before such date of enactment by 
        Executive Order 14032 (86 Fed. Reg. 30145).
            (4) Foreign person.--The term ``foreign person'' means an 
        individual or entity that is not a United States person.
            (5) Knowingly.--The term ``knowingly'' with respect to 
        conduct, a circumstance, or a result, means that a person has 
        actual knowledge, or should have known, of the conduct, the 
        circumstance, or the result.
            (6) United states person.--The term ``United States 
        person'' means--
                    (A) a United States citizen or an alien lawfully 
                admitted for permanent residence to the United States;
                    (B) an entity organized under the laws of the 
                United States or of any jurisdiction within the United 
                States, including a foreign branch of such an entity; 
                or
                    (C) a person in the United States.

SEC. 4. CODIFICATION OF EXECUTIVE ORDER 13959.

    (a) In General.--Executive Order 13959 (50 U.S.C. 1701 note; 
relating to addressing the threat from securities investments that 
finance Communist Chinese military companies), as in effect on the date 
of the enactment of this Act, and sanctions imposed pursuant to that 
Executive Order, shall remain in effect until terminated by an Act of 
Congress.
    (b) Annex.--Not less frequently than annually, the President 
shall--
            (1) update the Annex to Executive Order 13959; and
            (2) include, with respect to each entity included in that 
        Annex, any subsidiary or affiliate of the entity that engages 
        in activities relating to the reason the entity is included in 
        the Annex.
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