US softens threat of restrictions on Chinese investment in American tech firms

US President Donald Trump has opted to increase the powers of the Committee on Foreign Investment in order to curb Chinese acquisition of assets in America’s tech industry, backing away from a more aggressive approach.

This action by the Trump Administration is a step back from an earlier proposal to invoke the International Emergency Economic Powers Act (IEEPA), which involves declaring a national economic emergency and dramatically limiting China’s ability to invest in the US, as reported by The Straits Times. The IEEPA, advocated by trade hard-liners such as Peter Navarro US Director of Trade and Industrial Policy, would also be difficult for Beijing to retaliate against as China is eager to attract foreign investors including from the US.

Measures passed through both the House and Senate on Tuesday enhanced the panel’s authority to review a variety of investments not covered under current law. At the end of its review, Trump can block proposed investments.

The legislation is part of the Administration’s efforts to pressure Beijing into making major changes to its trade, technology transfer and industrial subsidy policies after US complaints that China unfairly acquired American intellectual property through joint venture requirements, unfair licensing and strategic acquisitions of US tech firms, as reported by Reuters.

In response to the measures, Beijing said it would carefully monitor US policies on inbound investment. Reuters reported China’s commerce ministry spokesman Gao Feng as saying that “China does not agree with [the US] tightening foreign investment conditions using national security as reasons.”

However, US Treasury Secretary Steven Mnuchin emphasised that the regulation was to restrict “all countries that are trying to steal our technology”, adding that the bill is “not specific to China,” as reported by The Washington Post.