BatteryIndustry – US Lawmakers Question Wall Street Support for Chinese Firm
BatteryIndustry – American financial institutions are facing growing scrutiny after a congressional investigation revealed that two major US banks assisted a leading Chinese battery producer in securing billions of dollars through a public stock offering despite national security concerns raised earlier by the US government.
Congressional Report Raises Questions Over Financial Dealings
A newly released investigation by the House Select Committee on the Chinese Communist Party stated that JPMorgan Chase and Bank of America participated in underwriting Contemporary Amperex Technology Co. Ltd. (CATL)’s Hong Kong stock market listing in May 2025. The move reportedly came only months after the Pentagon added the company to a list identifying firms allegedly connected to China’s military sector.
Lawmakers involved in the investigation argued that the banks overlooked potential risks tied to the company’s background and international operations. The committee claimed the financial institutions proceeded with the deal even after receiving warnings linked to security concerns and allegations involving forced labour practices in China’s Xinjiang region.
US Officials Call for Stronger Restrictions
Committee Chairman John Moolenaar said the findings highlighted the need for stricter financial regulations to stop American institutions from supporting companies considered linked to foreign military interests.
According to the report, lawmakers believe such business relationships provide more than financial backing. They argue that involvement from major US banks can also improve the international reputation and credibility of companies facing national security concerns.
CATL’s Military Link Allegations Under Examination
Contemporary Amperex Technology Co. Ltd., commonly known as CATL, is currently the world’s largest producer of electric vehicle batteries. The company was added to the Pentagon’s Section 1260H list in January 2025. US officials claimed the designation was related to concerns surrounding China’s military-civil fusion strategy, which involves cooperation between commercial firms and defence sectors.
Investigators alleged that both banks relied heavily on CATL’s explanation that the Pentagon’s designation was incorrect. The report stated that the company denied maintaining any direct relationship with the Chinese military.
However, congressional investigators said CATL did not fully respond to questions involving dual-use technologies, military partnerships, and links with organisations connected to the People’s Liberation Army.
Due Diligence Process Faces Criticism
The investigation also examined how the banks evaluated the risks before participating in the Hong Kong offering. According to the report, Bank of America used third-party assessments that reportedly included information from unnamed Chinese industry specialists and electric vehicle market analysts.
Meanwhile, JPMorgan reportedly concluded that CATL was not engaged in transactions involving military equipment or technologies considered dual-use in nature.
The committee argued that the reviews were insufficient given the broader concerns surrounding the company’s business network and international supply chain.
Links to Restricted Chinese Entities Highlighted
Lawmakers further alleged that CATL maintained business relationships with several Chinese firms already facing US restrictions. The report mentioned companies such as Huawei, China Mobile and other state-linked industrial groups.
Investigators also claimed CATL held an ownership interest in Wuhu Shipyard, which the report described as a Chinese shipbuilding company connected to naval defence activities.
Forced Labour Concerns Remain Central Issue
The committee additionally accused the banks of failing to properly address concerns linked to Xinjiang-related supply chains. Investigators stated that CATL declined to provide complete independent audits of its supply network but still assured the banks there were no ties to forced labour practices.
The report suggested the banks accepted those statements despite growing international scrutiny surrounding labour conditions in the region.
Morgan Stanley Also Mentioned in Separate Investigation
The congressional investigation also reviewed the role of Morgan Stanley in a separate Hong Kong stock offering involving Zijin Gold International, a subsidiary of Zijin Mining Group.
According to investigators, Morgan Stanley internally acknowledged that the parent company had been included on the Uyghur Forced Labor Prevention Act Entity List. Despite that, the bank reportedly approved participation in the deal after determining the transaction remained legally permissible under existing rules.
The report estimated that Morgan Stanley expected to earn millions of dollars in fees from the offering.
Lawmakers Recommend Tougher Financial Measures
The committee concluded by urging Congress to introduce legislation preventing American financial institutions from helping restricted foreign companies raise capital through international markets.
Lawmakers also recommended adding CATL and related subsidiaries to the Treasury Department’s Non-SDN Chinese Military-Industrial Complex list, which could result in tighter investment restrictions for US entities.