S. 3640: Divesting from Communist China’s Military Act of 2026

This bill, known as the Divesting from Communist China’s Military Act of 2026, aims to enhance national security by restricting financial interactions with entities identified as part of China's military-industrial complex. The bill proposes several key measures:

Identification of Chinese Military Companies

The Secretary of Defense is designated to identify entities that qualify as "Chinese military companies" based on their connections and operations associated with the People's Republic of China's military. These companies can include those that:

• Are owned or controlled by the Chinese military or related security forces.
• Contribute to China's military-civil fusion strategy, which involves integrating civilian and military efforts.
• Provide military-related services or products.

Non-SDN Chinese Military-Industrial Complex Companies List

Once an entity is identified, the Secretary of the Treasury is required to add it to the Non-SDN Chinese Military-Industrial Complex Companies List (NS–CMIC List), provided it is not already on this list. This inclusion requires the Treasury to act within 90 days of identification.

Financial Restrictions

When an entity is added to the NS–CMIC List:

• Within 60 days, the prohibitions outlined in Executive Order 13959 will apply. These prohibitions restrict transactions involving identified companies to mitigate national security risks.
• U.S. persons will have a one-year grace period during which they can divest (sell off) their securities in these companies. This is meant to allow individuals and entities to exit their investments in an orderly manner.

Support for Consistent Enforcement

The bill is also meant to harmonize the enforcement of U.S. sanctions and investment restrictions, ensuring a consistent approach across various regulations to enhance their effectiveness against entities that pose national security threats.

Definitions and Clarifications

The bill includes specific definitions for terms used, including what constitutes a “U.S. person” (any citizen, lawful resident, or domestic entity) and ensuring clarity regarding what types of securities are subject to these restrictions.

Relevant Companies

None found