How the Patriotic Investment Act Can Counter China’s Stimulus Package

Excerpt

China just announced a tranche of monetary moves to breathe air into its floundering economy, sending Chinese stocks soaring. But amid last week’s euphoria, a little-noticed bill was introduced in the U.S. Congress that has the potential to chill American investors’ appetite for Chinese assets. 

The Patriotic Investment Act (PIA) – jointly introduced by House China Committee Chairman John Moolenaar and Senator Marco Rubio – proposes to add a new tool to the United States’ growing economic statecraft arsenal: using the tax code to explicitly incentivize U.S. money away from China. Specifically, the bill is the fulfillment of a recommendation from the China Committee’s bipartisan economic competition report to “[e]nact legislation to ensure capital gains and dividends made from investing in the PRC are not taxed at a lower rate than American workers’ salaries.”

David Rader is a senior fellow at the Foundation for Defense of Democracies (FDD) and the former deputy director for Global Investment & Economic Security at the U.S. Department of Defense. Adam Chan is the former National Security Legal Fellow for the Select Committee on Competition with the Chinese Communist Party at the U.S. House of Representatives.