In the shadowed corridors of global finance, where profit often eclipses patriotism, a startling new congressional investigation has exposed how America’s premier banks JPMorgan Chase, Bank of America, and Morgan Stanley helped Chinese companies with deep ties to the People’s Liberation Army (PLA) and forced labor networks raise billions in international capital markets. The revelations, detailed in a report released yesterday by the House Select Committee on China, paint a troubling picture of due diligence processes that appear more focused on deal closure than national security or human rights.
Chairman John Moolenaar (R-MI) didn’t mince words in his accompanying statement and video. “American banks must not help Chinese military companies raise money,” he declared, emphasizing that such actions grant not just capital but legitimacy to entities advancing Beijing’s military ambitions.
This isn’t abstract geopolitics. It’s about batteries powering potential adversary submarines, gold mined amid allegations of Uyghur exploitation, and U.S. financial giants turning a blind eye.
The CATL Deal: Billions for a “Chinese Military Company”
At the heart of the scandal is Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest electric vehicle battery manufacturer. On January 7, 2025, the U.S. Department of Defense (DoD, referred to in the report as Department of War) designated CATL a “Chinese military company” under Section 1260H of the National Defense Authorization Act. This designation highlights CATL’s participation in China’s Military-Civil Fusion (MCF) strategy a deliberate policy to blur lines between civilian and military sectors to supercharge the PLA.
Just months later, in May 2025, JPMorgan and Bank of America underwrote CATL’s secondary listing on the Hong Kong Stock Exchange. The deal raised approximately $4.6 billion to $5.2 billion (HK$35.7 billion to over HK$41 billion with options), making it one of the largest global IPOs of the year.
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Subpoenaed documents reviewed by the Committee reveal the banks accepted CATL’s claims that the DoD designation was “erroneous,” despite public evidence of ties to PLA-linked entities. CATL partners with Huawei, NORINCO, CETC, CSSC, COMAC, China Mobile, and China National Nuclear Corporation. It holds stakes in Wuhu Shipyard, a naval vessel builder, and collaborates on research with the PLA’s National University of Defense Technology.
Read the full Select Committee report here: chinaselectcommittee.house.gov. For ongoing coverage of U.S. decoupling efforts, see related analysis at brieflyusa.com.
Internal bank assessments flagged risks but prioritized the transaction. JPMorgan concluded CATL had no military ties impacting stock purchases. Bank of America relied on third-party reports quoting unnamed sources downplaying the designation. CATL refused full supply chain audits, yet the banks proceeded, even as evidence linked its operations to the Xinjiang Production and Construction Corps (XPCC) a paramilitary entity central to Uyghur forced labor allegations under the Uyghur Forced Labor Prevention Act (UFLPA).
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This wasn’t isolated. The banks reportedly participated in a follow-on offering for CATL, doubling down despite warnings.
Morgan Stanley and Zijin Gold: Profits Over Prevention
The pattern repeats with Morgan Stanley’s sponsorship of Zijin Gold International’s Hong Kong IPO in September 2025. Zijin Mining Group, the parent, and its Xinjiang subsidiaries sit on the UFLPA Entity List due to forced labour concerns.
Internal Morgan Stanley documents, per the Committee, acknowledged sanctions risks, ties to sanctioned entities, and human rights issues from U.S. and allied governments. Yet high-level approval greenlit the deal. Zijin Gold’s IPO helped the parent raise funds by spinning off overseas gold assets, capitalizing on bullion prices.
Zijin operations span Serbia to Colombia, with recurring human rights complaints. The deal underscores how banks navigate or bypass U.S. concerns about entities fueling both military modernization and alleged genocide.
Inside the Due Diligence Failures: A Systemic Playbook
The Committee’s subpoenas uncovered a consistent “playbook.” Banks commission reports, ask questions, and accept incomplete answers from Chinese firms operating under Beijing’s national security laws, which can restrict transparency.
- Risk Flagging, Then Ignoring: Documents show flagged national security and forced labor exposures.
- Reliance on Self-Reporting: CATL’s denials trumped DoD conclusions.
- No Full Audits: Supply chain opacity accepted without pushback.
- Deal Momentum: Low fees or prestige deals outweighed caution.
This echoes broader critiques of Wall Street’s China engagement. As one historical parallel noted in discussions, capitalists have long sold rope to adversaries. Today, it’s lithium-ion tech potentially powering subs stalking U.S. carriers.
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Broader Implications: National Security at Stake
CATL’s batteries aren’t just for Teslas. DoD warnings and prior letters from figures like Sen. Marco Rubio (now Secretary of State) highlight their potential in Chinese submarines, enhancing stealth and range against U.S. forces in the Indo-Pacific.
Xinjiang links raise complicity concerns in what the U.S. has labeled a genocide. UFLPA aims to block forced-labor goods, yet capital flows continue.
Economically, U.S. investors and pension funds indirectly fund rival military capabilities while American battery firms struggle against subsidized Chinese giants. This undercuts “America First” investment policies.
Voices from the Investigation
Chairman Moolenaar’s video and statements call for urgent reforms. The report recommends:
- Prohibiting U.S. banks from raising capital for blacklisted adversary entities.
- Strengthening OFAC’s Non-SDN Chinese Military-Industrial Complex (NS-CMIC) List.
- Adding CATL to NS-CMIC restrictions.
Critics argue existing laws suffice if enforced; banks counter they followed rules and aren’t investigators. Yet the Committee sees a legal gap enabling harm.
Banks have not publicly detailed responses beyond standard compliance statements. Attempts to reach JPMorgan, Bank of America, Morgan Stanley, CATL, and Zijin for comment yielded limited replies emphasizing adherence to regulations.
Historical Context and Global Echoes
This fits a pattern. U.S. banks have navigated China risks for decades, from earlier listings to dual-use tech. Post-2018 trade tensions and MCF revelations intensified scrutiny. The Select Committee’s work builds on prior letters (April 2025 urging withdrawal) and subpoenas (July 2025).
Internationally, allies watch. EU and others grapple with similar dependencies on Chinese EVs and minerals. Hong Kong listings provide a workaround for U.S. investor restrictions.
What Must Change: Policy and Accountability
The report demands legislative and executive action. Potential steps include:
- Bans on Underwriting: Targeted prohibitions for 1260H or UFLPA-listed firms.
- Enhanced Due Diligence: Mandatory independent audits, with liability for failures.
- Investor Disclosures: Clear warnings on military/human rights ties.
- Enforcement: Treasury/DoD coordination to expand lists.
For deeper policy dives, visit brieflyusa.com coverage on strategic decoupling.
Congressional oversight must intensify. Will CEOs testify? Will fines or restrictions follow? Public pressure changing banks, divesting matters.
The Bottom Line: Capital Has No Allegiance, But Nations Do
This investigation reveals a stark tension: Wall Street’s global profit imperative versus U.S. security in strategic competition with the CCP. Billions raised strengthen an adversary’s military and, per evidence, exploitative systems.
As Chairman Moolenaar noted, these deals provide funding and credibility. In an era of great power rivalry, neutrality isn’t possible. American financial institutions must align with American interests.
The Committee has lit a flare. Now comes the hard part: translating scrutiny into safeguards. America’s economic might should deter threats, not empower them.
