[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3640 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 3640
To require the Secretary of the Treasury to include any entity
identified as a Chinese military company on the Non-SDN Chinese
Military-Industrial Complex Companies List.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 14, 2026
Mr. Scott of Florida (for himself, Mr. Cruz, Mr. Banks, and Mrs. Moody)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To require the Secretary of the Treasury to include any entity
identified as a Chinese military company on the Non-SDN Chinese
Military-Industrial Complex Companies List.
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 ``Divesting from Communist China's
Military Act of 2026''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) In Executive Order 13959 (50 U.S.C. 1701 note; relating
to addressing the threat from securities investments that
finance Communist Chinese Military Companies), President Donald
J. Trump described the People's Republic of China's military-
industrial complex by specifically citing the military-civil
fusion strategy of the Government of the People's Republic of
China, in which that Government ``is increasingly exploiting
United States capital to resource and to enable the development
and modernization of its military, intelligence, and other
security apparatuses . . . [k]ey to the development of the
PRC's military, intelligence, and other security apparatuses is
the country's large, ostensibly private economy''.
(2) In Executive Order 14032 (50 U.S.C. 1701 note; relating
to addressing the threat from securities investments that
finance certain companies of the People's Republic of China),
President Joseph R. Biden reasserted those concerns and further
found that the use of Chinese surveillance technology outside
the People's Republic of China and the development or use of
Chinese surveillance technology to facilitate repression or
serious human rights abuse constitute unusual and extraordinary
threats, expanding the scope of the national emergency declared
in Executive Order 13959.
(3) Section 1260H(g) of the William M. (Mac) Thornberry
National Defense Authorization Act for Fiscal Year 2021 (Public
Law 116-283; 10 U.S.C. 113 note) defines a ``Chinese military
company'' as ``an entity that is--
``(i)(I) directly or indirectly owned by,
controlled by, or beneficially owned by,
affiliated with, or in an official or
unofficial capacity acting as an agent of or on
behalf of, the People's Liberation Army,
Chinese military and paramilitary elements,
security forces, police, law enforcement,
border control, the People's Armed Police, the
Ministry of State Security (MSS), or any other
organization subordinate to the Central
Military Commission of the Chinese Communist
Party, the Chinese Ministry of Industry and
Information Technology (MIIT), the State-Owned
Assets Supervision and Administration
Commission of the State Council (SASAC), or the
State Administration of Science, Technology,
and Industry for National Defense (SASTIND); or
``(II) identified as a military-civil
fusion contributor to the Chinese defense
industrial base; and
``(ii) engaged in providing commercial
services, manufacturing, producing, or
exporting''.
(4) The functions and objectives of Chinese military
companies and contributors to the Chinese military-industrial
complex are substantially similar and warrant a commensurate
level of treatment under United States statutes and
regulations.
(5) Section 805 of the National Defense Authorization Act
for Fiscal Year 2024 (Public Law 118-31; 10 U.S.C. 4651 note
prec.) imposed restrictions on purchases by the Department of
Defense of goods and services produced or developed by Chinese
military companies identified under section 1260H(g) of the
William M. (Mac) Thornberry National Defense Authorization Act
for Fiscal Year 2021 and entities subject to the control of
such companies. Beginning June 30, 2026, the Department of
Defense will be prohibited from executing new contracts with
such companies and entities, and starting June 30, 2027, the
Department of Defense will be prohibited from purchasing end
products or services produced or developed by such companies
and entities indirectly through third parties.
(6) As the Department of Defense prepares to implement the
procurement restrictions described in paragraph (5), it is
still possible for companies and entities described in that
paragraph to raise capital by selling securities to investors
that trade on United States exchanges.
(7) In harmonizing enforcement approaches across sanctions
regimes of the United States Government, Congress can assist
the President to ensure consistent treatment of entities posing
national security risks, thereby enhancing the effectiveness of
United States sanctions and investment restrictions.
SEC. 3. INCLUSION OF CHINESE MILITARY COMPANIES ON NON-SDN CHINESE
MILITARY-INDUSTRIAL COMPLEX COMPANIES LIST.
(a) In General.--Not later than 90 days after the Secretary of
Defense identifies an entity as a Chinese military company operating
directly or indirectly in the United States under section 1260H of the
William M. (Mac) Thornberry National Defense Authorization Act for
Fiscal Year 2021 (Public Law 116-283; 10 U.S.C. 113 note), the
Secretary of the Treasury shall include that entity on the Non-SDN
Chinese Military-Industrial Complex Companies List (commonly known as
the ``NS-CMIC List'') if the entity is not already included on the NS-
CMIC List.
(b) Effect of Inclusion.--
(1) In general.--Except as provided by paragraph (2), not
later than 60 days after the inclusion of an entity on the NS-
CMIC List under subsection (a), the prohibitions set forth in
Executive Order 13959 shall apply with respect to the entity.
(2) Divestment period.--A United States person may, during
the one-year period beginning on the date on which an entity is
included on the NS-CMIC List under subsection (a), purchase or
sell publicly traded securities issued by the entity solely for
the purpose of divesting, in whole or in part, such securities.
(c) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the
House of Representatives.
(2) 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 amended
by Executive Order 14032 (50 U.S.C. 1701 note; relating to
addressing the threat from securities investments that finance
certain companies of the People's Republic of China).
(3) Non-sdn chinese military-industrial complex companies
list; ns-cmic list.--The terms ``Non-SDN Chinese Military-
Industrial Complex Companies List'' and ``NS-CMIC List'' mean
the list maintained by the Office of Foreign Assets Control of
the Department of the Treasury under Executive Order 13959 or
any successor order.
(4) Publicly traded security.--The term ``publicly traded
security'' includes--
(A) any security (as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)))
denominated in any currency that trades on a securities
exchange, or through the method of trading that is
commonly referred to as ``over-the-counter'', in any
jurisdiction; and
(B) any security that is derivative of or designed
to provide investment exposure to a security described
in subparagraph (A).
(5) United states person.--The term ``United States
person'' means--
(A) any 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 any foreign branch of such an
entity); or
(C) any person in the United States.
<all>