US Senate Approves Defense Bill Targeting China Over Biotech, Investment | World

The 3,000-page legislation also directs the Pentagon to establish a joint drone program with Taiwan and increase funding — from $300 million to $1 billion — for security cooperation related to the self-ruled island. Beijing views Taiwan as a breakaway province to be unified with the mainland, by force if necessary.

The 100-member Senate approved the National Defense Authorization Act (NDAA) by a vote of 77 to 20, sending it to the White House, where it will be signed into law by US President Donald Trump.

The bill, which authorizes programs but does not fund them, also provides $400 million in military aid to Ukraine over the next two years.

The NDAA codifies an existing Treasury Department regulation aimed at restricting U.S. investment in high-tech sectors aimed at China, such as artificial intelligence, semiconductor chips and quantum computing. The law also added hypersonic technology to the list and directs the government to identify other technologies to cover.

“This gives Treasury additional powers to investigate past transactions that should have been reported to the government and force divestment if necessary,” said HK Park, who heads the foreign investment screening practice at risk management firm Crumpton Global.

Supporters of this policy argue that U.S. capital should not be used to support China’s technological advances and benefit its military. The foreign investment screening mechanism will now also include Cuba, Iran, North Korea, Russia and Venezuela, in addition to Hong Kong and Macau.

The NDAA also targets Chinese biotechnology companies. The law will prevent federal agencies from acquiring equipment or working with any biotechnology company – including its subsidiaries – that the Office of Management and Budget (OMB) designates as a “biotechnology company of concern.” The restriction will also apply to any entity on the Pentagon’s Chinese 1260H military list, which currently only includes BGI Group.

BGI Group declined to comment, but referred Nikkei Asia to an earlier company statement from last year on the biosafety law, on which the new clauses are based.

“The bill is a ploy against corporations under the guise of national security, but in reality it will strengthen the monopoly in the genomics market held by a dominant American company that lobbied for the bill,” the company said in September 2024.

The defense bill also expands the scope of China’s military list 1260H, which warns companies to avoid cooperating with the aforementioned entities, including affiliates and entities operating outside China, thereby creating reputational risk. Analysts say this could deter non-US companies from working with publicly traded companies and third-country intermediaries.

The Department of Defense’s supply restrictions will also extend to solar panels, inverters and some critical minerals. The legislation requires the Pentagon to phase out the use of Chinese-made computers and printers and assess the threat posed by TP-Link, a Chinese modem and networking maker.

This recent bipartisan push comes amid mixed signals from the Trump administration regarding its stance on China. The executive branch’s National Security Strategy (NSS), released two days before the defense bill’s release, abandoned previous language describing China as a strategic threat and instead focused on economic relations. The China-related provisions in the NDAA signal that Congress will continue to take a tougher approach to the world’s second-largest economy, even as Trump pursues a trade deal with Beijing.

The Chinese embassy in Washington said it “firmly opposes” the provisions relating to China.

“We hope that the United States will correct its improper practices as soon as possible and provide an open, fair and non-discriminatory business environment for Chinese companies investing in the United States,” embassy spokesperson Liu Pengyu told Nikkei Asia in an emailed statement.

Derek Grossman, a professor of political science and international relations at the University of Southern California, said the differences between the NDAA and the NSS are stark.

“In the NDAA, Congress takes a hard line and emphasizes measures to contain Beijing,” Grossman said. “It also demonstrates strong support for Taiwan and allows U.S. allies and partners to work together with Washington to hinder Beijing’s goals.”

However, NS views China primarily as an economic threat, Grossman said. “When discussing security dimensions, she strictly avoids mentioning Beijing, preferring to speak in general terms about maintaining access to the South China Sea and preventing the hegemony of one regional power over others,” he said.