US representatives on Tuesday introduced a bill to protect US markets from the economic fallout of a potential Chinese Communist Party (CCP) invasion of Taiwan.
The “Fortifying US Markets from Chinese Military Aggression Act” was introduced by bipartisan members of the US House of Representatives Young Kim, Zach Nunn and Ritchie Torres.
Although the US has longstanding military plans in the event of a CCP invasion of Taiwan, it lacks an “economic game plan,” Nunn said.
Photo: EPA-EFE
The amendment to the Financial Stability Act would create an advisory committee of 12 members, including market makers, asset managers, exchanges and geopolitical experts, to create a coordinated response plan to safeguard the US economy.
The committee would work under the Financial Stability Oversight Council (FSOC) and make recommendations to identify US market vulnerabilities and ensure US capital markets are prepared for potential volatility and disruptions.
The FSOC would then issue annual public reports on the economic risks of a Taiwan conflict.
Bloomberg has estimated that a CCP invasion of Taiwan would cause a global GDP loss of US$10 trillion, double the contraction of the 2008 financial crisis or the COVID-19 pandemic.
As Taiwan produces nearly 90 percent of the world’s advanced semiconductors, economists estimate the US economy would suffer a short-term drop of up to 34 percent, a news release from Kim’s office said.
If the CCP were to take hold of Taiwan’s chip manufacturing capabilities, it would be “devastating, not just for global markets, but for Main Street Iowa businesses,” Nunn said.
“The United States must be proactive in protecting our economy in case of an attack or blockade against Taiwan,” Kim said.
The bill would ensure that US financial markets are not “exploited to strengthen an authoritarian regime that threatens our values and our allies,” Torres said, adding that “American investors should never be in the business of bankrolling the CCP’s military.”
The bill must now pass both the House and the Senate before being signed into law by the US president.
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