Defeat on outward-bound investment legislation shows significant change in the party

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In the US House of Representatives, when Republicans are in the majority, the chair of the House financial services committee is among the most coveted. The HFSC’s arcane yet vital task of regulating Wall Street makes political controversy infrequent and fundraising a breeze.

It’s a role Congressman Patrick McHenry relished until recently. But, still in his first year as chair, McHenry has abruptly announced his retirement from Congress, which Fox News greeted last week with the caption, “Lame Duck Congressman’s Shameful Last Quack”.

The quack in question is McHenry’s steadfast opposition to bipartisan legislation that would require US entities to notify the Treasury Department before investing in sensitive technologies in China. Traditionally, such opposition would have ended the matter. When a Republican committee chair says no to a bill in his or her jurisdiction, the GOP drops it. When the bill is one seeking to burden Wall Street, a Republican HFSC chair could typically count on his colleagues welcoming his obstruction.

So McHenry seems not to have made much effort preparing a plausible defence of his position. “If we oppose China’s state-run economy, we want more private investment — not less,” he wrote to Treasury secretary Janet Yellen. “And if we are truly concerned by China’s technology companies, we want as many Americans as possible steering them, spreading western standards, and complying with US laws.”

The argument seems outlandish, implying US investment in China undermines rather than reinforces a Chinese Communist party that already exerts tight control on capital flows and the companies receiving them. In fact, any investment the CCP does not want, it can block, or expropriate.

Continue reading in the Financial Times
Oren Cass
Oren Cass is the executive director at American Compass.
@oren_cass
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