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US-CHINA-DISPUTE-TRADE-INVESTMENTS-UPDATE
Trump favors tougher foreign investment oversight but stops short of
targeting China
WASHINGTON, June 28, 2018 (BSS/AFP) – US President Donald Trump on
Wednesday said he supported tougher restrictions on foreign investment in
sensitive technology, as well as export controls on those goods, but he
stopped short of imposing specific restrictions on China.
Following a report that raised “very serious issues” on China’s trade and
investment practices, Trump decided a plan in Congress to enhance the powers
of the so-called Committee on Foreign Investment in the United States (CFIUS)
was “the best approach to protect critical technology.”
In a statement, Trump said that if Congress fails to pass strong enough
legislation to protect “the crown jewels of American technology and
intellectual property” then he will take further action.
After a year-long investigation into China’s trade policies, the White
House on May 29 said it planned to announce “specific investment restrictions
and enhanced export controls” by June 30 targeting China’s efforts to acquire
“industrially significant technology.”
However, Trump backed away from singling out China and instead supported
broader measures that would apply to any country.
The House of Representatives and the Senate have each approved a bill to
boost the authority of CFIUS, an interagency body that reviews potential
foreign investment, to broaden the types of deals subject to oversight.
Now the two chambers will have to reconcile them into a single bill for
Trump to sign.
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.”
China on Thursday said it was closely following the bill and that
countries should be liberalizing policies to attract investment.
“We do not support tightening foreign investment requirements on the
grounds of national security,” said commerce ministry spokesman Gao Feng.
– Clamping down on investment –
Even the hint of a possible CFIUS review can kill a potential investment
and the committee has blocked Chinese investment in semiconductors and
targeted Russian nuclear investment. Analysts worry the talk of tighter
oversight will discourage investment that benefits the US economy.
MORE/HR/1108
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US-CHINA-DISPUTE-TRADE-INVESTMENTS-UPDATE 2 LAST WASHINGTON
According to the Rhodium Group, a research firm, Chinese investment in the
United States fell 35 percent in 2017 from the record $45.6 billion in 2016,
and has slowed to a trickle, just $1.4 billion in the first quarter of this
year.
Gao noted Chinese companies have concerns about the stability of policies
in the US.
“Capital votes with its feet,” Gao told a press briefing.
Trump also instructed the Commerce Department to look at new export
controls to “further ensure a robust defense of American technology and
intellectual property.”
The White House may have been prompted to step back from tough
restrictions on China after stock markets dropped sharply and as experts
warned that strong action against Beijing could open US firms up to severe
retaliation.
Industry officials and trade experts applauded the decision to refrain
from going after China specifically.
“It is a welcome surprise given the other signals” from the
administration, said Jake Colvin, vice president of the National Foreign
Trade Council.
The CFIUS reform in Congress “was the result of extensive process of
stakeholder engagement,” Colvin told AFP. So allowing the legislative effort
to continue is the “proper path to focus on right now, rather than specific
China restrictions.”
– Not going soft on China –
Still, Treasury Secretary Steven Mnuchin dismissed the idea the
administration was going soft on China.
“For those who want to say it’s us being weak on China, the answer is no,”
he said.
And analysts pointed to comments from White House economic advisor Larry
Kudlow warning that tougher action on China was still being contemplated.
“The president is unsatisfied with their response on trade talks and so he
put out there the possibility of additional tariffs,” Kudlow told reporters.
“The ball is in their court.”
Trump’s trade measures were prompted by US complaints over Chinese
policies that Washington said either forced companies to relinquish key
technology or allowed China to steal it outright.
Trump announced 25 percent import tariffs on hundreds of Chinese products
to pressure the country to alter its practices. Those tariffs are due to take
effect July 6.
US officials have highlighted Beijing’s “Made in China 2025” industrial
development plan as a source of concern, since they say it is a map for
dominating significant high-tech industries from space to telecommunications,
robotics, and electric cars.
After days of declines and increased volatility amid fears of a worsening
trade war, US stocks rallied early in the session but reversed course around
midday to close with sharp declines once again, despite the more optimistic
sentiment in European markets, which closed higher.
BSS/AFP/HR/1010