Trump administration to use review panel to curb China tech investments

White House decides against outright limits on Chinese investment

The Senate approved changes to the way the Committee on Foreign Investment in the United States operates, which will allow the committee to block joint-venture takeovers of USA companies by foreign companies. The measures passed with strong bipartisan support in both chambers.On Tuesday, the House bill was approved 400 to 2.

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.

The measure gives the Committee on Foreign Investment in the United States more power to review sensitive investments involving China, Russia and state sponsors or terrorism, allows reviews of land purchases near USA military installations and ports and could stop key technology from being exported to China and other countries.

Investors saw this as a somewhat softer approach than Mr Trump's earlier plan - to block firms, which are at least 25 per cent Chinese owned, from taking over U.S. tech companies.

Earlier US media had reported that Trump would sign an executive order specifically targeting Chinese investors looking to acquire technology in sectors such as new-energy vehicles, robotics and aerospace.

The comments ran counter to a May 29 White House statement: "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". It said the specifics of its plan would be officially announced by June 30, which is Saturday. "The president felt very strongly that we should be protecting technology no matter who we are dealing with".

In Beijing, China's commerce ministry stressed on Thursday that it opposed using national security as grounds to restrict foreign investments.

It appears that this plan has been abandoned in favour of an expanded role for CFIUS. Critics of that approach pointed out that little to no progress has been made in trade talks with China and that a stronger stance would be more likely to convince China's leadership to change their predatory trade practices.

"It's clearly directed at China", he said. "It avoids use of emergency powers, which would have created a new ad hoc and highly uncertain framework", said Robert Kahn, a professor at American University who previously worked at the World Bank and International Monetary Fund. "A strong CFIUS enhanced by Firrma will deter foreign investment that risks exposing sensitive USA technology", he said.

The president can direct CFIUS to heighten scrutiny on sensitive technologies.

According to the Rhodium Group, a research firm, Chinese investment in the United States fell 35 per cent in 2017 from the record US$45.6 billion (RM183 billion) in 2016, and has slowed to a trickle, just US$1.4 billion in the first quarter of this year.

Xiao Yaqing, the chairman of the Asset Supervision and Administration Commission, the regulator of the biggest state industrial conglomerates, said the Chinese government would not be angry "as long as they don't discriminate against us".

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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