Trump signals shift from Chinese investment limits

Trump signals shift from Chinese investment limits

Trump signals shift from Chinese investment limits

This committee, which falls under the Treasury Department, looks at transactions "that could result in control of a US business by a foreign person", and then determines "the effect of such transactions on the national security of the United States".

FIRRMA (Foreign Investment Risk Review Modernization Act) passed the House by an overwhelming margin yesterday, and it's expected to become law after Congress agrees on final language.

The Chinese government had expressed its concerns over the reports amid fears that they would escalate tensions between the two sides amid the current stand-off over tariffs.

Trump campaigned for the White House on a pledge to take a much more aggressive stance with China and other trading partners. Some anticipated the USA would block takeovers of US companies by any company with at least 25 percent Chinese ownership.

Some Trump administration officials, including trade adviser Peter Navarro, have urged tough investment restrictions targeting China, including an order saying that companies with at least 25 percent ownership would be automatically banned from investments involving American companies. In response, China is prepared the same day to slap tariffs on billions in US exports, including soybeans - a direct threat to Trump supporters in America's heartland.

It said CFIUS and other USA regulators have become a "major hurdle" for Chinese investors who are already dealing with restrictions placed by the Chinese government on foreign investment.

The comments Wednesday stood in contrast to a White House statement on May 29 that said "the United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology".

Trump said the legislation would offer "additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity".

If Congress fails to pass the legislation quickly, Trump said, he would direct the administration to implement new restrictions under executive authority that could be applied globally. The panel reviews proposed investments in USA businesses by foreign investors.

"It seems like this move is being undertaken with the goal of coming to a resolution ultimately on the trade policy issues the US has with China", said Stephen Ezell, who manages global innovation policy at the Information Technology and Innovation Foundation think tank.

"It is a welcome surprise given the other signals" from the administration, said Jake Colvin, vice president of the National Foreign Trade Council.

"China will closely monitor the legislation process and evaluate its potential impact on Chinese companies", Chinese commerce ministry spokesman Gao Feng told reporters in a regular briefing. Rhodium Group estimates Chinese entities invested $29.7 billion in US companies in 2017.

Through this review, United States will assess its export controls and make any modifications that may be needed to strengthen them to defend national security and technological leadership.

The US is planning to impose tariffs on US$34 billion of Chinese goods on Friday next week, an amount that could reach US$450 billion if China refuses to back down and retaliates with sanctions of its own.

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