The Trump administration is allegedly considering a plan to temper Chinese investments in technologies the U.S. considers sensitive by invoking a law reserved for national emergencies, among other options, according to sources at the Treasury Department. Officials are considering plans to identify technology sectors in which Chinese companies would be banned from investing, including semiconductors and so-called 5G wireless communications.
This would mark another step in Trump’s plan to punish China for what the US sees as violations of American intellectual-property rights. After the administration released the results of its investigation into China’s IP practices last week, the President asked Treasury Secretary Steven Mnuchin to consider investment restrictions on Chinese firms.
While investors have so far remained focused on Trump’s plan to impose tariffs on Chinese imports, new restrictions could increase the slowdown in Chinese investments in the US since Trump took office, negatively affecting the ability of American companies to raise capital and holding down valuations.
“There will be limitations on foreign investment,” Commerce Secretary Wilbur Ross said Tuesday during in an interview on Fox Business Network.
Pending legislation in Congress to increase the authority of the inter-agency Committee on Foreign Investment in the US (CFIUS)—the panel that now reviews foreign takeovers—will be part of the response, Ross said that Trump may look at other actions he can take.
The Trump administration is also considering enforcing strict reciprocity on Chinese acquisitions, meaning US regulators would only approve deals in sectors in which American companies are allowed to invest, sources told the South China Morning Post. China currently restricts or bans foreign investment in a range of industries, from car manufacturing to telecoms providers and rare-earth exploration.
The same sources say that all options are still on the table but to keep an eye out for what might be coming.
What Say you SOFREP? Are we overdue to get tough on Chinese tech acquisition both legal and illegal? Is it time to tame the dragon? Sound off in the comments.