Party, to include support for PRC state policies and 
goals.’’. 
(3) The Commission further stated in its report 
that ‘‘[f]rom this point of view, the clear economic 
benefits of foreign investment in the U.S. must be 
weighed against the potential security concerns re-
lated to infrastructure components coming under the 
control of foreign entities. This seems particularly 
applicable in the telecommunications industry, as 
Chinese companies continue systematically to ac-
quire significant holdings in prominent global and 
U.S. telecommunications and information technology 
companies.’’. 
(4) In its 2011 Annual Report to Congress, the 
United States China Economic and Security Review 
Commission stated that ‘‘[t]he extent of the state’s 
control of the Chinese economy is difficult to quan-
tify . . . There is also a category of companies that, 
though claiming to be private, are subject to state 
influence. Such companies are often in new markets 
with no established SOE leaders and enjoy favorable 
government policies that support their development 
while posing obstacles to foreign competition. Exam-
ples include Chinese telecoms giant Huawei and 
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such automotive companies as battery maker BYD 
and vehicle manufacturers Geely and Chery.’’. 
(5) In the bipartisan ‘‘Investigative Report on 
the United States National Security Issues Posed by 
Chinese Telecommunication Companies Huawei and 
ZTE’’ released in 2012 by the Permanent Select 
Committee on Intelligence of the House of Rep-
resentatives, it was recommended that ‘‘U.S. govern-
ment systems, particularly sensitive systems, should 
not include Huawei or ZTE equipment, including in 
component parts. Similarly, government contrac-
tors—particularly those working on contracts for 
sensitive U.S. programs—should exclude ZTE or 
Huawei equipment in their systems.’’. 
(6) General Michael Hayden, who served as Di-
rector of the Central Intelligence Agency and Direc-
tor of the National Security Agency, stated in July 
2013 that Huawei had ‘‘shared with the Chinese 
state intimate and extensive knowledge of foreign 
telecommunications systems it is involved with’’. 
(7) The Federal Bureau of Investigation, in a 
February 2015 Counterintelligence Strategy Part-
nership Intelligence Note stated that, ‘‘[w]ith the ex-
panded use of Huawei Technologies Inc. equipment 
and services in U.S. telecommunications service pro-
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vider networks, the Chinese Government’s potential 
access to U.S. business communications is dramati-
cally increasing. Chinese Government-supported tele-
communications equipment on U.S. networks may be 
exploited through Chinese cyber activity, with Chi-
na’s intelligence services operating as an advanced 
persistent threat to U.S. networks.’’. 
(8) The Federal Bureau of Investigation fur-
ther stated in its February 2015 counterintelligence 
note that ‘‘China makes no secret that its cyber war-
fare strategy is predicated on controlling global com-
munications network infrastructure’’. 
(9) At a hearing before the Committee on 
Armed Services of the House of Representatives on 
September 30, 2015, Deputy Secretary of Defense 
Robert Work, responding to a question about the 
use of Huawei telecommunications equipment, stat-
ed, ‘‘In the Office of the Secretary of Defense, abso-
lutely not. And I know of no other—I don’t believe 
we operate in the Pentagon, any [Huawei] systems 
in the Pentagon.’’. 
(10) At that hearing, the Commander of the 
United States Cyber Command, Admiral Mike Rog-
ers, responding to a question about why such 
Huawei telecommunications equipment is not used, 
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stated, ‘‘As we look at supply chain and we look at 
potential vulnerabilities within the system, that it is 
a risk we felt was unacceptable.’’. 
(11) In March 2017, ZTE Corporation pled 
guilty to conspiring to violate the International 
Emergency Economic Powers Act by illegally ship-
ping United States-origin items to Iran, paying the 
United 
States 
Government 
a 
penalty 
of 
$892,360,064 for activity between January 2010 
and January 2016. 
(12) The Office of Foreign Assets Control of 
the Department of the Treasury issued a subpoena 
to Huawei as part of a Federal investigation of al-
leged violations of trade restrictions on Cuba, Iran, 
and Sudan. 
(b) PROHIBITION ON AGENCY USE OR PROCURE-
MENT.—The head of an agency may not procure or obtain, 
may not extend or renew a contract to procure or obtain, 
and may not enter into a contract (or extend or renew 
a contract) with an entity that uses, or contracts with any 
other entity that uses, any equipment, system, or service 
that uses covered telecommunications equipment or serv-
ices as a substantial or essential component of any system, 
or as critical technology as part of any system. 
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(c) REPORT.—Not later than one year after the date 
of the enactment of this Act, and annually thereafter, the 
Secretary of Commerce, in consultation with the Secretary 
of Defense and the United States Trade Representative, 
shall submit to Congress a report on sales by the Govern-
ment of the People’s Republic of China of covered tele-
communications equipment or services through partial 
ownership or any other methods. 
(d) DEFINITIONS.—In this section: 
(1) AGENCY.—The term ‘‘agency’’ has the 
meaning given that term in section 551 of title 5, 
United States Code. 
(2) COVERED
TELECOMMUNICATIONS
EQUIP-
MENT
OR
SERVICES.—The term ‘‘covered tele-
communications equipment or services’’ means any 
of the following: 
(A) Telecommunications equipment pro-
duced by Huawei Technologies Company, ZTE 
Corporation, or any other Chinese telecom enti-
ty identified by the Director of National Intel-
ligence, the Secretary of Defense, or the Direc-
tor of the Federal Bureau of Investigation as a 
security concern (or any subsidiary or affiliate 
of any such entity). 
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(B) Telecommunications services provided 
by such entities or using such equipment. 
(C) 
Telecommunications 
equipment 
or 
services produced or provided by an entity that 
the head of the relevant agency reasonably be-
lieves to be an entity owned or controlled by, or 
otherwise connected to, the Government of the 
People’s Republic of China. 
TITLE 
II—FAIR 
TRADE 
EN-
FORCEMENT ACTIONS WITH 
RESPECT TO THE PEOPLE’S 
REPUBLIC OF CHINA 
SEC. 201. COUNTERVAILING DUTIES WITH RESPECT TO 
CERTAIN INDUSTRIES IN THE PEOPLE’S RE-
PUBLIC OF CHINA. 
(a) POLICY.—It is the policy of the United States— 
(1) to reduce the import of finished goods from 
the People’s Republic of China relating to the Made 
in China 2025 plan set forth by the Government of 
the People’s Republic of China; and 
(2) to encourage allies of the United States to 
reduce the import of finished goods from the Peo-
ple’s Republic of China relating to the Made in 
China 2025 plan. 
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(b) INCLUSION OF MADE IN CHINA 2025 PRODUCTS 
IN DEFINITION OF COUNTERVAILABLE SUBSIDY.—Para-
graph (5) of section 771 of the Tariff Act of 1930 (19 
U.S.C. 1677) is amended by adding at the end the fol-
lowing: 
‘‘(G) TREATMENT
OF
CERTAIN
CHINESE 
MERCHANDISE.—Notwithstanding 
any 
other 
provision of this title, if a person presents evi-
dence in a petition filed under section 702(b) 
that merchandise covered by the petition is 
manufactured or produced in, or exported from, 
the People’s Republic of China and included in 
the most recent list required under section 183 
of the Trade Act of 1974, determined in con-
sultation with the United States Trade Rep-
resentative, the administrating authority shall 
determine that a countervailable subsidy is 
being provided with respect to that merchan-
dise.’’. 
(c) INCLUSION OF MADE IN CHINA 2025 PRODUCTS 
IN
DEFINITION
OF
MATERIAL
INJURY.—Paragraph 
(7)(F) of such section is amended by adding at the end 
the following: 
‘‘(iv) TREATMENT OF CERTAIN CHI-
NESE
MERCHANDISE.—Notwithstanding 
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any other provision of this title, if a peti-
tion filed under section 702(b) alleges that 
an industry in the United States is materi-
ally injured or threatened with material in-
jury or that the establishment of an indus-
try in the United States is materially re-
tarded by reason of imports of merchan-
dise manufactured or produced in, or ex-
ported from, the People’s Republic of 
China and included in the most recent list 
required under section 183 of the Trade 
Act of 1974, determined in consultation 
with the United States Trade Representa-
tive, the Commission shall determine that 
material injury or such a threat exists.’’. 
SEC. 202. REPEAL OF REDUCED WITHHOLDING RATES FOR 
RESIDENTS OF CHINA. 
(a) IN GENERAL.—Section 894 of the Internal Rev-
enue Code of 1986 is amended— 
(1) by striking ‘‘The provisions of’’ in sub-
section (a) and inserting ‘‘Except as otherwise pro-
vided in this section, the provisions of’’, and 
(2) by adding at the end the following new sub-
section: 
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‘‘(d) EXCEPTION
FOR
PEOPLE’S
REPUBLIC
OF 
CHINA.— 
‘‘(1) IN GENERAL.—The rates of tax imposed 
under sections 871 and 881, and the rates of with-
holding tax imposed under chapter 3, with respect to 
any resident of the People’s Republic of China shall 
be determined without regard to any provision of the 
Agreement between the Government of the United 
States of America and the Government of the Peo-
ple’s Republic of China for the Avoidance of Double 
Taxation and the Prevention of Tax Evasion with 
Respect to Taxes on Income, signed at Beijing on 
April 30, 1984. 
‘‘(2) REGULATIONS.—The Secretary shall pro-
mulgate regulations to prevent the avoidance of the 
purposes of this subsection through the use of for-
eign entities.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to income received after the date 
of the enactment of this Act. 
SEC. 203. TAXATION OF OBLIGATIONS OF THE UNITED 
STATES HELD BY THE GOVERNMENT OF THE 
PEOPLE’S REPUBLIC OF CHINA. 
(a) IN GENERAL.—Section 892 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(c) as subsection (d) and by inserting after subsection (b) 
the following new subsection: 
‘‘(c) EXCEPTION.—This section shall not apply to the 
Government of the People’s Republic of China.’’. 
(b) CENTRAL BANK.—Section 895 of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘Income’’ and inserting the fol-
lowing: 
‘‘(a) IN GENERAL.—Income’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b) EXCEPTION.—This section shall not apply to the 
any central bank of the People’s Republic of China.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to income received or derived after 
the date of the enactment of this Act. 
SEC. 204. SURTAX ON CERTAIN INCOME DERIVED FROM 
CHINA. 
(a) IN GENERAL.—Subpart D of part II of sub-
chapter N of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
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‘‘SEC. 899. IMPOSITION OF SURTAX ON CERTAIN INCOME 
FROM CHINA. 
‘‘(a) IN GENERAL.—In addition to other taxes, there 
is imposed on the China source income of any applicable 
United States person a tax equal to 2 percent of such in-
come. 
‘‘(b) APPLICABLE UNITED STATES PERSON.—For 
purposes of this subsection, the term ‘applicable United 
States person’ means any United States person who— 
‘‘(1) holds an investment through a partnership 
with a resident of the People’s Republic of China, or 
‘‘(2) participates in a joint shareholding venture 
with a resident of the People’s Republic of China. 
‘‘(c) CHINA SOURCE INCOME.—For purposes of this 
section, the term ‘China source income’ means any 
amount received from sources within the People’s Republic 
of China which is attributable to an investment described 
in subsection (b)(1) or a venture described in subsection 
(b)(2). Such amount shall be reduced so as to take into 
account deductions (including taxes) properly allocable to 
such income under rules similar to the rules of section 
954(b)(5).’’. 
(b) TAX NOT TREATED AS PART OF REGULAR TAX 
LIABILITY.—Section 26(b)(2) of such Code is amended by 
striking ‘‘and’’ at the end of subparagraph (X), by striking 
the period at the end of subparagraph (Y) and inserting 
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‘‘, and’’, and by adding at the end the following new sub-
paragraph: 
‘‘(Z) section 899 (relating to surtax on cer-
tain income from China).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part II of subchapter N of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 899. Imposition of surtax on certain income from China.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to income received after the date 
of the enactment of this Act. 
TITLE III—STOPPING FOREIGN 
BUSINESSES SANCTUARY ACT 
OF 2019 
SEC. 301. SHORT TITLE. 
This title may be cited as the ‘‘Stopping Foreign 
Businesses Sanctuary Act of 2019’’. 
SEC. 302. JURISDICTION OVER CERTAIN FOREIGN ENTI-
TIES. 
Section 1605 of title 28, United States Code, is 
amended by inserting after subsection (d) the following: 
‘‘(e) Notwithstanding any other provision of law, an 
entity is not immune from the jurisdiction of the courts 
of the United States or of the States if the entity— 
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‘‘(1) is incorporated in a foreign state in which 
state-owned or state-controlled entities commonly en-
gage in commercial activity; and 
‘‘(2) conducts commercial activity in the United 
States.’’. 
SEC. 303. COMMERCIAL ACTIVITY OF AFFILIATE ENTITIES. 
Section 1603(d) of title 28, United States Code, is 
amended— 
(1) by inserting ‘‘(1)’’ before ‘‘A’’; and 
(2) by adding at the end the following: 
‘‘(2) For purposes of this chapter, a commercial 
activity of an agency or instrumentality of a foreign 
state, or of an entity described in section 1605(e), 
shall be attributable to any corporate affiliate of the 
agency, instrumentality, or entity that— 
‘‘(A) directly or indirectly owns a majority 
of shares of the agency, instrumentality, or en-
tity; and 
‘‘(B) is also an agency or instrumentality 
of a foreign state, or an entity described in sec-
tion 1605(e).’’. 
Æ 
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