You are here

Trump decides against harshest measures on China investments


THE White House opted to take a less confrontational approach towards Chinese investments in the US as it pushes Congress to strengthen an existing review process rather than invoke a little-used law reserved for economic emergencies.

President Donald Trump wants Congress to pass legislation to bolster the Committee on Foreign Investment in the US, or CFIUS, so it can prevent companies from violating intellectual-property rights of American companies, two administration officials said on Wednesday, speaking on the condition of anonymity.

The administration decided not to employ the International Emergency Economic Powers Act of 1977 that would give the president broad authority to curb Chinese investments in the country.

The decision comes amid White House allegations that China engages in widespread theft of intellectual property. The inter-agency CFIUS panel, if bolstered by Congress, can address those concerns while maintaining an open investment climate, one of the officials said.

Your feedback is important to us

Tell us what you think. Email us at

Mr Trump's choice shows that he is favouring a more measured strategy that requires coordination with Congress, rather than working solely through the executive branch. It's also a win for proponents of conciliatory tone in negotiations with China such as Treasury Secretary Steven Mnuchin, who told reporters on Wednesday that moves to strengthen CFIUS aren't intended to single out Beijing.

"This is not intended to target China," Mr Mnuchin said. "It's fair to say that certain countries will get a heightened review; I don't think we need a list of special countries."

CFIUS legislation passed in the House would expand investigations by the panel to include minority investments in "critical technology" or "critical infrastructure" and joint ventures where technology companies contribute intellectual property. While CFIUS reviews are technically voluntary, the bill would require foreign investors that are at least 25 per cent owned by foreign governments to go through CFIUS when they are acquiring at least a 25 per cent stake in a US business.

The Treasury Department has been closely involved in drafting the legislation, and Congress secured the administration's full support before proposing it.

Mr Mnuchin on Wednesday increased pressure on Congress to approve the Foreign Investment Risk Review Modernization Act, or FIRRMA, saying lawmakers must act fast.

"Should Congress fail to pass strong FIRRMA legislation that better protects the crown jewels of American technology and intellectual property from transfers and acquisitions that threaten our national security - and future economic prosperity - I will direct my Administration to deploy new tools, developed under existing authorities, that will do so globally," Mr Trump said in a statement.

Only five takeovers of American firms have been blocked by US presidents on national security grounds since 1990. Mr Trump has used the tool more frequently than past administrations.

"This is a positive development. 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. "The new congressional legislation strengthening CFIUS could still have a chilling effect on Chinese investment depending on how it is implemented." BLOOMBERG

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to