People's Republic of China: Veto of Key Legislation

Governor Katie Hobbs has vetoed HB2542, legislation sponsored by State Representative Lupe Diaz (R-LD19) that would have restricted state contracts with companies connected to the People's Republic of China.

HB2542 would have required companies seeking state contracts to certify they are not owned or controlled by the People's Republic of China. Violations would have resulted in a $100,000 fine and a five-year ban from conducting business with the state.

The veto highlights different approaches between the Republican-led Legislature and Democratic Governor on addressing China-related security concerns.

Representative Diaz's Position:

• Supports direct restrictions on state contracts with Chinese-owned or controlled companies.
• Advocates for immediate consequences including fines and business bans for violations.
• Views the measure as necessary economic protection against what he describes as hostile foreign influence.
• Emphasizes procurement restrictions as a key tool for state-level security measures.

Governor Hobbs' Apparent Position:

• Has previously expressed support for addressing foreign threats through her proposed BAN Act.
• The veto suggests preference for alternative approaches to China-related security concerns.
• Specific reasons for the veto have not been publicly detailed by the governor's office.

Representative Diaz characterized this as inconsistent, noting the governor's recent statements calling on the Legislature to "stop playing games with Arizona's security and get serious about cracking down on enemies seeking to do us harm." 

He argued that HB2542 represented exactly the type of serious action the governor had requested.

The representative referenced findings from the U.S. House Select Committee on Strategic Competition Between the United States and the Chinese Communist Party, which has identified concerns about Chinese market practices and potential security risks in various technology sectors including drones, networking equipment, and telecommunications infrastructure.

Lupe Diaz represents Legislative District 19 in Southeastern Arizona and serves as Chairman of the House Land, Agriculture & Rural Affairs Committee. Representative Diaz indicated he plans to reintroduce similar legislation in the next legislative session.