US lawmakers are intensifying efforts to prohibit funds from investing in Chinese companies, in an effort to address the strategic, commercial and national security risks Beijing poses to the US economy and financial markets.
Bipartisan representatives of the US Congress’s certified public accountant caucus have unveiled a bill entitled the No China in Index Funds Act, which includes civil penalties for violations of the proposed legislation.
Index funds minimise their expenses by simply investing in all the companies in a certain market sector without carefully scrutinising individual companies, a strategy that fails to consider the “unique difficulties” in evaluating Chinese companies, said Brad Sherman, co-author of the bills and ranking member of the capital markets subcommittee, part of the US House financial services committee, in a statement.