China hawks in the US House overcame a last-ditch lobbying effort and passed legislation on Monday night that would blacklist Chinese biotech companies and their US subsidiaries.

The bill, approved by a vote of 306 to 81, now goes to the Senate.

At stake, the bill’s backers argued, is whether a rival will dominate another field the US pioneered, amid fears China could engineer bioweapons or otherwise capitalise on biological data vacuumed up from the rest of the world.

The legislation, which passed the House Oversight Committee 40-1 in May, would affect five companies to start - BGI Group, BGI spinoffs MGI Tech Co and MGI’s US subsidiary Complete Genomics Inc, WuXi AppTec Co, and WuXi Biologics. 

Dubbed the Biosecure Act, the measure is the latest power flex by lawmakers who have already succeeded this year in requiring Chinese-based parent company Bytedance Ltd to divest from TikTok or face a US ban on the popular social media site. 

Bloomberg Intelligence gives the biosecurity bill a 70% chance of becoming law given strong support in both the House and the Senate. Numerous other bills targeting China are set for votes this week, including legislation targeting Chinese supply chains for electric vehicles as well as other industries.

The companies, whose stocks have fallen this year amid the blacklisting effort, have argued they aren’t a national security threat and are focused on health innovation. 

Complete Genomics has said the bill would bolster the already dominant market share of US rival Illumina Inc, and said it sells DNA sequencing machines but does not collect or access genetic data, which is controlled by their clients. Complete Genomics expressed disappointment after the vote, and that the legislation would inhibit research and wouldn’t protect data.

On Tuesday, WuXi AppTec WuXi Biologics said they did not pose a security risk to the US or any nation, according to filings with the Stock Exchange of Hong Kong.  

A prominent House Democrat, Representative Jim McGovern of Massachusetts, tried to persuade colleagues to sink the bill, sending a letter arguing that it selects companies to punish with no clear standard and should be reworked. 

“In the US, Congress does not just pick companies to punish at random with no clear criteria or due process,” wrote McGovern, who also opposed the TikTok measure. He pointed out that his own work against the Chinese regime led Beijing to sanction him last month.

While McGovern’s concerns were ignored by most of the House, he did win over Representative Jamie Raskin of Maryland, a fellow Democrat who had backed the measure in committee. Raskin said he had been assured his concerns about how the bill was drafted would be addressed before it reached the floor, but said they weren’t.

Like McGovern, he said the underlying issue was that Congress shouldn’t be targeting individual companies, and instead ought to set rules and task agencies with enforcing them.

“We should be setting forth the law, not implementing the law,” said Raskin, a constitutional law professor.

Complete Genomics announced in May it’s opening a lab in Massachusetts’ high-tech corridor, near McGovern’s district. And China-based WuXi Biologics announced in January it is expanding a facility in his district, which is expected to add 200 new jobs.

McGovern said on the House floor on Monday he would be prepared to shut down companies, even the one in his district, if there was evidence of bad behaviour. 

“This is how they do things in China. The PRC officials decide they don’t like you - so they blackball you,” he said of the legislation.

Representative Brad Wenstrup, an Ohio Republican and the bill’s primary sponsor, said the companies were named because they are aligned with the Chinese Communist Party, which is intent on dominating the biotech industry, and said millions of Americans’ data is potentially at risk.

After the vote, Speaker Mike Johnson’s office said in a statement that he “is not stopping here, and is committed to advancing further China-related legislation on investments and other predatory practices”. 

The legislation also has implications for the global pharmaceutical industry, as much of the world’s drug supply chain includes active ingredients produced by Chinese biotechnology companies.

Companies and researchers that receive US funding could continue using the Chinese companies’ products, like Complete Genomics’ DNA sequencing machines, until 2032 under existing contracts via a grandfather clause.

Efforts to prevent the measure from becoming law now move to the slower-moving Senate, where any member can complicate passage for the majority. 

Rand Paul, a libertarian-minded Kentucky Republican who was the sole vote against a Senate version of the biosecurity bill in committee, told Bloomberg in July he’d block quick passage of the legislation.

“I think it’s a mistake to let hysteria over China stop international trade,” he said, warning that “trade isolationism” could lead to war.

But Paul’s opposition may not be enough to sink the bill entirely. Senators are discussing adding the legislation to the chamber’s annual defence policy bill. 

  - Bloomberg