Congressional investigators are accusing major U.S. banks of helping a Chinese battery giant that the Pentagon labeled a "Chinese military company" raise billions of dollars from global investors despite unresolved national security concerns.

A new report from the House Select Committee on the Chinese Communist Party alleges JPMorgan Chase and Bank of America underwrote CATL's Hong Kong initial public offering after the Pentagon designated the company under its Section 1260H list in January 2025. The report also says JPMorgan, Bank of America and Morgan Stanley later participated in a second CATL stock offering.

The transactions highlight what the committee describes as a significant gap in U.S. policy: the Section 1260H designation carries reputational consequences but does not broadly prohibit Wall Street firms from helping identified companies raise capital.

What the Right Is Saying

Republican members of the select committee, led by Chairman John Moolenaar of Michigan, have been sharply critical of the banks' decisions. "American banks must not help Chinese military companies raise money, because in doing so they provide not only access to funding but also legitimacy and credibility to companies that are helping our adversary build up its military," Moolenaar said.

However, some conservative voices have defended the banks' position, arguing that current law permitted the transactions. Business-friendly Republicans note that CATL is not subject to U.S. sanctions and argue that prohibiting legal commercial activity could harm American competitiveness in battery technology, where Chinese firms dominate global supply chains.

The banks themselves have pushed back against the committee's characterization. JPMorgan CEO Jamie Dimon defended the bank's involvement with CATL in a May 2025 Bloomberg Television interview: "If we thought it was wrong, we wouldn't do it. The government did not sanction CATL."

What the Left Is Saying

Democratic lawmakers have largely aligned with the select committee's findings, arguing that American financial institutions should not profit from helping companies linked to China's military-civil fusion strategy access global capital markets.

Rep. Raja Krishnamoorthi of Illinois, the ranking Democrat on the Select Committee, has previously argued for expanding restrictions on U.S. investment in Chinese military-linked firms. Progressive advocates have called for stricter vetting procedures and greater coordination between financial regulators and the Defense Department to prevent similar situations.

Democratic critics note that current law permits these transactions despite bipartisan consensus that China represents a strategic competitor. They argue that legislative changes are needed to give teeth to Pentagon designations and prevent American capital from flowing to companies supporting Chinese military modernization.

What the Numbers Show

The House Select Committee report identifies two major stock offerings that U.S. banks helped facilitate for CATL following its Pentagon designation: an initial Hong Kong IPO and a subsequent secondary offering.

CATL is the world's largest manufacturer of electric vehicle batteries, controlling significant portions of global battery production capacity. The company maintains active partnerships with major Western automakers including Ford, Tesla, Stellantis, BMW and Volkswagen.

Ford Motor Company is currently constructing a $3 billion battery manufacturing facility in Michigan using CATL technology under a licensing arrangement designed to limit Chinese ownership while accessing the company's battery chemistry.

The Pentagon's Section 1260H list designates companies the Defense Department determines are linked to China's military or military-civil fusion strategy. Unlike Treasury sanctions, the designation does not automatically prohibit U.S. investment or commercial activity with listed firms.

The Bottom Line

The investigation places Wall Street at the center of a broader Washington debate over whether American financial institutions should continue facilitating capital raising for companies the Pentagon has identified as linked to China's military, even when such activities remain legal under current law.

JPMorgan and Bank of America have defended their due diligence processes, asserting that CATL is not sanctioned by the U.S. government and remains deeply integrated into Western manufacturing supply chains. The banks note they conducted reviews and shared details with congressional investigators.

The controversy underscores growing tension between U.S. national security concerns regarding China and economic realities: major American and European manufacturers remain heavily reliant on Chinese battery technology and supply chains for electric vehicle production.

Congressional watchers expect the select committee to recommend legislative changes that would restrict or require disclosure of Wall Street activity involving Pentagon-designated companies, though any bills would need to balance security concerns against potential impacts on U.S. financial industry competitiveness.