An influential panel in the US House of Representatives on Thursday urged sweeping restrictions on outbound investment in Chinese biotechnology, as it pushed for the advancement of a bill to restrict the industry’s operations in the American market.
The hearing held by the House select committee on competition with China came after a Senate committee voted 11-1 on Wednesday backing a companion bill prohibiting US federally-funded institutions from contracting with certain biotech providers in China.
That legislation names genomics service provider BGI Group and biopharmaceutical firm Wuxi AppTec as companies of concern, along with their subsidiaries and direct affiliates.
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“Every bit of value flowing to Chinese biotech or genetic-science companies will be used to strengthen the [Chinese Communist Party] and the [People’s Liberation Army],” said Republican congressman Mike Gallagher of Wisconsin, the select committee’s chairman.
“We must assume that we must operate accordingly and we must cut off this flow of support,” Gallagher added. “American companies need to take off the golden blindfold and recognise that there is no such thing as a truly private business in China.”
Introduced in January by Gallagher and Illinois Democrat Raja Krishnamoorthi, the committee’s ranking member, the bipartisan bill called the Biosecure Act claims that BGI Group and Wuxi AppTec have ties to China’s military.
Krishnamoorthi on Thursday said China could use biotech to “potentially harm Americans” and that the country was conducting experiments to “make human soldiers have biologically enhanced capabilities” and “collecting large quantities of genetic data from Americans”.
The White House last week issued an executive order meant to prevent “countries of concern” such as China and Russia from accessing high volumes of sensitive personal data about Americans and people connected to the US government.
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“We need to draw a line in the sand and ensure biotech innovation reflects our values,” Krishnamoorthi said at the hearing. “This means holding bad actors accountable and imposing outbound investment controls on [Chinese Communist Party]-affiliated biotech firms.”
Liu Pengyu, the Chinese embassy’s spokesman in Washington, blasted the allegation of genetic data theft as “groundless”, calling it “another example of the US making up excuses and using all means to suppress Chinese companies”.
“China is firmly opposed to this,” Liu said on Thursday. “The US side should respect the basic facts, abandon ideological bias, stop abusing various excuses to suppress Chinese companies unreasonably and provide fair, just and non-discriminatory treatment to Chinese companies in their operations.”
Meanwhile, witnesses at Thursday’s hearing urged the US government to bolster its strategic support for America’s biotech sector to hold its lead and outcompete China.
“What is required is a clear vision of what the nation needs to achieve via biotechnology and how the government and the private sector can work together to maintain US economic competitiveness and protect US power in this age of biology,” testified Tara O’Toole of venture-capital firm In-Q-Tel.
That said, opportunities existed for strategic Sino-American cooperation, such as building a global monitoring regime that prevents biotech from being weaponised, said Jason Kelly, CEO of synthetic biology company Ginkgo Bioworks.
Both the Senate and House bills have a long way to go before becoming law, with content subject to further change.
The clear bipartisan, bicameral support for the legislation, however, triggered sell-offs of Wuxi and BGI-related stocks in Hong Kong’s and mainland China’s capital markets.
The Senate bill that cleared a committee vote on Wednesday has been amended to exempt pre-existing contracts and agreements.
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Nevertheless, the legislation mentions Wuxi and BGI, over the companies’ objections. It is not yet clear when the bill will be brought to the Senate floor for a vote.
In a Hong Kong stock-exchange filing on Thursday, Ge Li, Wuxi’s chairman, said: “The company strongly disagrees with such pre-emptive and unfair designation without due process, and we firmly believe that Wuxi AppTec has not posed, does not pose, and will not pose a security risk to the United States or any other country.”
“We also reiterate that Wuxi AppTec does not have a human-genomics business or collect human-genomic data,” Li added.
The Shanghai-headquartered company generated more than 60 per cent of its revenue from its US business in the first half of 2023, according to its interim report.
BGI said its company’s income generated from the American market accounted for a relatively small share. It explained that its US subsidiary mainly provided scientific research services and that its business operations also complied with US personal privacy and data-security regulations, according to Chinese media Cailianshe.
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