The debate over whether Chinese-owned TikTok can operate in the United States has returned with fervor, revealing more about the risk to Chinese stocks in a U.S. presidential election year. The committee that spearheaded the TikTok legislation passed by the House of Representatives last week has another bill aimed at restricting Chinese biotech companies, among many policy proposals. Such considerations motivated Goldman Sachs analysts to update their model to measure the level of risk arising from US-China tensions on Chinese stocks. Their barometer, created in 2020, “correlates well with the timeline of US-China events and Chinese stock performance,” the analysts said. They said recent events mean they need to consider more factors, such as the performance of Chinese exporters to the United States, artificial intelligence names and nearly 150 Chinese healthcare companies. Goldman’s revised U.S.-China tension barometer stands at a modest 53 out of 100, indicating a “fairly benign” outlook for bilateral relations. While some factors, such as geopolitics, have improved, others are on the rise. “Risks in the ‘Soft Tech’ sector have increased in recent months, in our view likely driven by market volatility resulting from the proposed BioSecure Act and the expansion/intensification of restrictions on artificial intelligence and other advanced technologies,” Goldman analysts wrote in a March 14 report. In late January, the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party submitted a draft of the “BioSecure Act” to the House of Representatives. “Once in effect, the legislation would restrict federally funded healthcare providers from using adversary foreign biotechnology companies of interest,” the Committee said in a statement, specifically citing some Chinese entities. It’s unclear how quickly the bill and its Senate version can pass through Congress, if at all. The latest TikTok legislation — which effectively bans the app in the United States unless Chinese parent company ByteDance sells it — was introduced in the House on March 5 and passed just over a week later. But as the TikTok bill now makes its way to the Senate, many analysts expect its momentum to slow. “A key issue for the Senate is whether the House bill is specific to TikTok, rather than a broader policy restriction on apps that pose potential national security risks,” Raymond James analysts said in a note. That hasn’t stopped investors from planning to buy the popular TikTok app, assuming it goes up for sale. Former Treasury Secretary Steven Mnuchin told CNBC’s “Squawk Box” that he supports TikTok legislation and is putting together a group to buy the app. Mnuchin was Treasury secretary under Donald Trump, who will run for president again this year in November against President Joe Biden. Taking a tough stance on China has become a rare area of bipartisan agreement. The Trump administration has raised tariffs on Chinese products, prompting Beijing to take similar action on some U.S. products. The Biden administration has limited Chinese firms’ ability to access high-end semiconductors, which Beijing has repeatedly asked the United States to remove. “The build-up to and outcome of the election will have consequences for global financial markets, US-China relations and Chinese stock returns,” Goldman analysts said. Investing Around It In their updated model of US-China tensions, they also highlighted which Chinese stocks tended to outperform or underperform when their barometer rose. Based on data from 2018, Goldman analysis found that the three mainland China-listed stocks that tend to perform best when the tension barometer rises are: healthcare company IMEIK Technology, Postal Savings Bank and Luzhou Laojiao alcohol. In sector terms, consumer sectors “tend to outperform when underlying strains rise,” the Goldman report says. When the barometer indicates easing, capital goods, tech hardware, semiconductors and other cyclical stocks tend to outperform, analysts say. — CNBC’s Michael Bloom contributed to this report.