US House committee moves quickly to approve bill limiting business with Chinese biotech firms

Bipartisan legislation that would restrict US business with world-leading Chinese biotech companies and their subsidiaries was approved by a House of Representatives committee on Wednesday.

The House Committee on Oversight and Accountability passed the bill 40-1. To become law, the bill must pass the full House and Senate, then be signed by the president.

The bill, introduced on Friday, would prevent federal agencies from contracting with five Chinese biotech companies - BGI Group, MGI, Complete Genomics, Wuxi AppTec, and Wuxi Biologics - and their clients, and establish an inter-agency process for identifying additional companies.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

The legislation is intended to push US firms to decrease their reliance on Chinese manufacturing and research in light of national security concerns surrounding China's biotech industry.

Sponsored by Representative Brad Wenstrup, Republican of Ohio, the bill is also supported by the top Republican and Democrat on the House select committee on China, John Moolenaar of Michigan and Raja Krishnamoorthi of Illinois.

US Representative John Moolenaar, the Michigan Republican who chairs the House select committee on China, is a supporter of the bill. Photo: CNP via Zuma Press Wire/TNS alt=US Representative John Moolenaar, the Michigan Republican who chairs the House select committee on China, is a supporter of the bill. Photo: CNP via Zuma Press Wire/TNS>

"US taxpayer dollars should not be funding PRC biotech companies that are actively working with the [Chinese Communist Party] and the People's Liberation Army to potentially collect Americans' genomic data and intellectual property and use that data to further their authoritarian objectives," Krishnamoorthi said on Wednesday.

Krishnamoorthi accused BGI, a genomics company, of using DNA from millions around the world without their consent on genomic projects conducted by the Chinese military. He also alleged that Wuxi AppTec, a pharmaceutical and medical device company, has both stolen US firms' intellectual property and operated genetic testing centres in cooperation with the Chinese military.

Targeted companies say that the bill is based on misleading and false allegations and would limit competition.

The US is a substantial market for several of the companies. In 2023, Wuxi Biologics - listed as a top five global drug developer and manufacturer by revenue by data analytics company Statista - earned about 47 per cent of sales from North America, according to its annual report. And almost two-thirds of Wuxi AppTec's revenue, per an annual report, came from the US in 2023.

Congressional scrutiny of Wuxi AppTec in particular has alarmed the US drug industry, which is already struggling with widespread shortages. The company is embedded deeply in the US drug ecosystem and biotech executives have scrambled to impress on lawmakers that a fast-paced decoupling could remove some medicines from the pipeline for years.

Wenstrup's bill, a revised version of an earlier House bill, gives US entities until January 2032 to end work with Chinese firms with which they have existing contracts.

The Senate Homeland Security and Governmental Affairs committee approved similar legislation in March. That bill, a companion to the older House bill, would allow only 60 to 180 days for US entities to sever ties after the relevant federal agency issued guidance.

Wuxi Biologics is headquartered in China. Photo: Wuxi Biologics alt=Wuxi Biologics is headquartered in China. Photo: Wuxi Biologics>

The bipartisan, bicameral support for proposals to restrict Chinese biotech firms has triggered sell-offs of Wuxi AppTec and BGI-related stocks in Hong Kong and mainland China capital markets, though news of the revised bill lifted shares of potentially affected Chinese companies in Hong Kong this week.

The new bill, similar to earlier versions, allows for waivers and exceptions, such as for the provision of necessary healthcare services to overseas Americans.

"This bill addresses ... national security risks without disrupting medical supply chains," said Representative James Comer, the Kentucky Republican who chairs the House Committee on Oversight and Accountability.

"This bill is a necessary step towards protecting America's sensitive healthcare data from the CCP before these companies become more embedded in the US economy, university systems and federal contracting base," he added.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.