Even as the U.S. and China sink deeper into a new Cold War, billions of dollars in U.S. investment continue to flow into China every year with virtually no transparency or oversight. Worse, some of this capital funds China’s growing military capabilities.

Congress is finally poised to address this threat in its annual defense bill, but some House Republicans are actively fighting to keep U.S. investments flowing into China, free from scrutiny or prohibition.

The Chinese Communist Party’s ability to tap into the our unrivaled capital markets has proven a massive strategic liability for the U.S. Remarkably, the federal government has few tools to review capital flows into China, and it is wholly incapable of determining what proportion of them go directly to China’s military and dual-use capabilities.

Rep. Mike Gallagher (R-Wis.), chairman of the House Select Committee on the Chinese Communist Party, recently wrote to President Biden, citing ongoing Congressional investigations to suggest that a “sizeable portion” of U.S. investment into China finances “technology companies with documented connections to the Chinese military and the Chinese Communist Party’s abhorrent human rights abuses.”

>>> The Case for Urgency Against China

Similarly, a recent report in the Washington Post highlighted how several Wall Street index funds have directed millions of dollars in the savings and pensions of everyday Americans into “dozens [of Chinese companies] that have been sanctioned or blacklisted by the U.S. government.” Shockingly, BlackRock, the massive U.S. investment firm with nearly $9 trillion in assets under management, has invested in Chinese state-owned companies that make fighter jets and warships for the People’s Liberation Army.

This is strategic malpractice. Yet mounting efforts to address these self-defeating investments face political headwinds from Wall Street and their allies in both parties.

President Biden issued an executive order on outbound investments in August, which was delayed for months and narrowed in scope under pressure from interest groups seeking to preserve the status quo. Ultimately, the executive order is rife with loopholes and only restricts investments in three types of technologies.

What’s more, Treasury Secretary Janet Yellen will be responsible for implementing the order and enforcing its prohibitions. Yet, weeks before it was issued, she visited Beijing and reassured her hosts that these restrictions would have no “fundamental impact on affecting the investment climate for China.”

Unfortunately, rather than pushing the Biden administration to do more, some House Republicans are making matters worse by actively resisting efforts to monitor and restrict the flow of investment into China.

Before leaving town for the August recess, every Republican on the House Appropriations Committee voted to insert an amendment from Subcommittee Chairman Steve Womack (R-Ark.) into a spending bill to block Treasury from scrutinizing U.S. investments into China. The legislative maneuver could hamstring efforts to monitor and control the mostly unrestricted flow of U.S. investment dollars into China, and now the House Rules Committee has advanced the bill with that provision included.

Unfortunately, other House Republicans are also working to hinder the Treasury Department from addressing investments in China. House Financial Services Chairman Patrick McHenry (R-N.C.) publicly took credit for weakening Biden’s executive order on U.S. capital flows into China. He has argued that transparency over investments into China would amount to “emulating Xi Jinping” and make the U.S. “become more like the Chinese Communist Party.”

This sort of false equivalence has led Republicans on the Financial Services Committee to back a misguided effort to deflect from the need to directly address outbound investment into China. Rep. Andy Barr’s Chinese Military and Surveillance Company Sanctions Act of 2023 purports to require the administration to use existing powers to sanction a limited number of Chinese companies. But to be blunt, it is a superficial effort to sound tough on China while avoiding real action. The Treasury Department has long refused to implement such sanctions on Chinese companies even when required to do so by law.

>>> The Emerging “Cold Tech War” Between the U.S and China

Thankfully, the Senate has been far more proactive. This summer, it voted almost unanimously to include the bipartisan Outbound Investment Transparency Act in its version of the defense bill. That provision would require transparency for certain investments into a few high-tech sectors in China.

But the Transparency Act faces multiple threats. McHenry, who recently argued for “more Western investment in China—not less,” can unilaterally block the measure from the final defense bill. And if the House Appropriations amendment is maintained in a final spending bill passed by both chambers, it would effectively kill both the Senate effort and Biden’s executive order, thus allowing the Chinese communists to continue benefiting from relatively unregulated U.S. investment flows for the foreseeable future.

On this issue, House Republicans have it backwards: they should be pushing for a more aggressive effort, not seeking to water down or block measures that are already too weak. As it stands, the Biden White House’s feeble executive order and the Democrat-controlled Senate’s even weaker bill amount to a more ambitious agenda than the Republican House has adopted to address dangerous investments in China.

Wall Street and its allies in Congress might wish to continue unsupervised and unrestricted investing in China. But the rest of us know better. The status quo is unacceptable. It is time to demand action.