Divesting from Communist China’s Military Act of 2026

Summary

Requires the Treasury Department’s Office of Foreign Assets Control (OFAC) to add to its Non‑SDN Chinese Military‑Industrial Complex Companies List any company the Defense Department has identified as a “Chinese military company.” Once OFAC lists a company, the executive‑order prohibitions on U.S. investment apply within 60 days, but U.S. persons get a one‑year window to divest their publicly traded securities. The Treasury must add DoD‑identified companies within 90 days of Defense identification if they are not already listed. The measure harmonizes an existing Defense identification process with Treasury sanctions steps to limit U.S. capital flowing to Chinese military‑linked firms and sets clear timelines and a limited divestment grace period for investors and financial firms to comply.

• Treasury/OFAC must add any DoD‑identified "Chinese military company" to the NS‑CMIC List within 90 days if not already listed.
• Once added, Executive Order 13959 prohibitions apply within 60 days of listing.
• U.S. persons get a one‑year divestment period from the date of listing to sell publicly traded securities; purchases are allowed only to divest.
• The requirement aligns Treasury sanctions listings with Defense Department identifications based on an existing statutory definition of Chinese military companies.
• Does not create new spending or procurement rules but strengthens financial restrictions and harmonizes enforcement timelines.
• Defines key terms (publicly traded security, U.S. person, NS‑CMIC List) to clarify who and what is covered.
• Targets entities linked to PRC military or military‑civil fusion activities that raise national security concerns.
• Imposes administrative and compliance obligations on financial institutions and U.S. investors holding affected securities.