Communist China is waging financial war (not too strong a term here) against the United States. So it only makes sense for the U.S. to play financial hardball in return.
In that light, Rep. Greg Murphy (R-NC) deserves applause for introducing a bill that would pressure large universities to divest from Chinese enterprises that are deemed as threats to our national security. Joining Murphy as the original co-sponsors are Reps. Brad Wenstrup (R-OH), Adrian Smith (R-NE), Lloyd Smucker (R-PA) and Darin LaHood (R-IL).
University endowments are tax-advantaged, often tax-free. A State Department letter in 2020 reported that a majority of American university endowment funds own stock in companies that are instruments of the People’s Republic of China. According to the letter, “dozens of PRC government agencies, state-owned, and notionally private corporations” have some relation to massive human rights abuses in the Xinjiang region, not to mention other nefarious activities and connections.
Also, through “Confucius Institutes” on many college campuses, along with multiple other methods, Chinese enterprises engage in intellectual property theft and financial espionage against U.S. entities — a problem against which Sen. Ben Sasse (R-NE), to his credit, has been working diligently.
For all these reasons, Murphy wants American universities to divest from Chinese outfits. His bill would target (for now) only the approximately 80 U.S. colleges and universities that boast endowments larger than a billion dollars. His bill would assess a 50% excise tax on such endowments’ investments when they are acquired and a 100% tax on “gains realized from such investments.” In other words, for all intents and purposes, it would make those investments worthless, which is exactly the point.
The bill doesn’t just vaguely ask for all Chinese companies to be targeted for divestment. Instead, the tax would apply only to investments in companies on any one of four U.S. government lists that identify entities that may “threaten the national security of the United States.” The bill, therefore, is well targeted at security risks, not at China or its people in general.
Schools with endowments so big certainly can afford to be choosy about where they invest. As it is, almost all of them already claim to follow what are commonly termed environmental, social, and governance guidelines for investments. If ESG rules can lead colleges to take up left-wing social goals, as they often do, surely they should also require the schools to avoid entanglements with entities controlled by a brutal dictatorship that arguably is engaged in genocide.
This bill, or one very much like it, deserves to be on the fast track toward passage. Indeed, it should be such a mark of shame for any member of Congress to oppose it that it ought to pass by unanimous voice vote.
The real scandal, meanwhile, is that the universities are invested in these Chinese entities in the first place. If Congress must pass a law to pressure colleges into divesting from these companies, so be it. But it’s a shame that so many universities seem to inhabit the wrong moral universe.
