US lawmaker moves bill to ban Chinese biotech firms from federal contracts, alleging complicity with military

A US lawmaker has proposed a bill to block Chinese biotechnology companies doing business with the US government due to alleged complicity with the Chinese military, broadening the ongoing sanctions in sectors including hi-tech, semiconductors and cotton production over economic, political and human rights issues.

China seeks to dominate biotechnology as an industry of the future, and the nation's biotech firms "have repeatedly collaborated with PLA [the People's Liberation Army] entities" with power to compel them to turn over their data, according to a bill moved by Republican Mike Gallagher of Wisconsin this week.

The bill cited Third Military Medical University and Key Laboratory of High-Altitude Medicine, entities it said are "an espionage tool" of the Communist Party. Other entities mentioned include BGI, formerly known as Beijing Genomics Institute, and WuXi Apptec, a sister company of WuXi Biologics.

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"The time has come to stop US taxpayer dollars from flowing to foreign adversary biotech companies like BGI that have ties to the PLA, and prevent taxpayers from buying biotech equipment from foreign adversaries that facilitate the transfer of US persons' genetic data to a foreign adversary," according to the bill.

The move represents an escalation in Washington's technology ban on Chinese companies. The biotech industry had remained largely unscathed, until the latest provocation. It is further evidence that Washington's "small yard and high fence" strategy is getting tighter, not easier, despite a summit involving presidents Xi Jinping and Joe Biden in California last November.

The Hang Seng Index slid 1.6 per cent on Friday, ending a three-day rally and trimming the market's first weekly advance in 2024. The Hang Seng HK-Listed Biotech Index, which tracks 50 of the largest companies in the biotech, pharmaceuticals and medical devices industries, tumbled 6 per cent, the biggest drop since March 2022.

WuXi Biologics sank 18 per cent to HK$24.55, the biggest drop since December 4, to erase HK$23.2 billion (US$3 billion) from its market value. WuXi Apptec, which only became a Hang Seng Index member last month, plunged 16 per cent to HK$64.60.

The proposed legislation said that based on WuXi Apptec's press statements, the firm has sponsored "military-civil fusion events" in mainland China, and has granted awards to PLA researchers and invited PLA institutes to participate in the selection process of company awards.

WuXi Biologics CEO Chris Chen was previously an adjunct professor at the PLA's Academy of Military Medical Sciences, it added. Several phone calls to WuXi Biologics's head office in eastern Jiangsu province went unanswered.

"This is just a proposal from an anti-China lawmaker, and the likelihood of it becoming a law is extremely low, and it would take several years," local media outlet Jiemian cited Chen as saying in a report on Friday. "Personally, I have never held any position in any military institution. We will promptly issue a clarification," he was quoted as saying.

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.

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