Trump Changes Course, Will Use Existing Law To Review Chinese Tech Investments

White House decides against outright limits on Chinese investment

White House decides against outright limits on Chinese investment

Trump, during a meeting with U.S. lawmakers, pushed back on reports that the USA was preparing the investment restrictions and suggested the administration could do it through the foreign investment reviews under the Committee on Foreign Investment in the United States.

The US House of Representatives on Tuesday approved a bill that would make changes to the committee's law.

David Dollar, the Obama administration Treasury Department's top economic emissary to China, called Trump's approach to China "chaotic" and said it left Beijing confused about his ultimate aims. After news of the White House decision broke early Wednesday, stock futures rallied.

The new investment rules will target Chinese companies investing in technology industries in the US.

The Trump administration will rely on Congress to produce legislation that would restrict new Chinese investments in USA technology companies, backing away from a earlier threat to issue specific restrictions on such investments in "industrially significant" areas of the US economy.

White House officials say that in addition to the decision to protect USA technology through CFIUS, the president has instructed the Commerce Department to "assess the current export regime" to determine if rules about sharing important technologies with other countries. should be tightened.

The tariffs that Trump has already announced against China involve goods in aerospace, IT, robotics and machinery sectors.

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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.

"I have concluded that such legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity."
He said the interagency investment committee, known as CFIUS, provided a lot of ways to protect technology. The House would frame the chamber's position in a conference committee on the fiscal 2019 defense authorization bill, to which the Senate has attached a similar security review proposal from Senate Majority Whip John Cornyn, R-Texas.

"This is not meant to target China", Mnuchin said. At the end of its review, the president can block proposed investments.

The House passed a bill expanding CFIUS' authority this week.

FIRRMA will expand the scope of transactions reviewable by CFIUS to more effectively address national security concerns that fall outside the current scope of CFIUS review, he said.

But Hunter noted that Trump's approach to policymaking is so mercurial that it's impossible to say whether the conciliatory approach will last or whether the Navarro camp will stage a comeback.

Officials had considered limiting Chinese-owned companies from acquiring more than 25 percent of American firms that own sensitive technologies, and reaction to the easing from one prominent Republican was negative. Rather they say it's a process that is well understood by the US business community and one that maintains an open investment climate. Tariffs on $34 billion in Chinese products are scheduled to take effect July 6, with up to anadditional $416 billion possible in subsequent months.

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