Tighter US in­vest­ment rules to help China: an­a­lysts

Global Times - - Bizove - By Chen Qingqing and Chu Daye

Tight­ened rules on in­vest­ment in the US in so-called sen­si­tive sec­tors, po­ten­tially tar­get­ing Chi­nese merger and ac­qui­si­tion deals (M&A), might have a sil­ver lin­ing in terms of boost­ing China’s do­mes­tic ca­pac­ity in such ar­eas, ex­perts said on Thurs­day.

The US gov­ern­ment will tighten rules on for­eign in­vest­ment in crit­i­cal in­dus­tries un­der an in­terim reg­u­la­tion in Novem­ber, the Trea­sury De­part­ment said on Wed­nes­day. As a re­sult, the Com­mit­tee on For­eign In­vest­ment in the United States (CFIUS) will get en­hanced power in its re­view of 27 sen­si­tive sec­tors, po­ten­tially curb­ing Chi­nese in­vest­ment.

Ac­cord­ing to Reuters, the 27 in­dus­tries cover telecom­mu­ni­ca­tions and semi­con­duc­tors as well as air­craft man­u­fac­tur­ing (in­clud­ing en­gines and en­gine parts), alu­minum pro­duc­tion, com­puter stor­age de­vices, guided mis­siles and other mil­i­tary equip­ment.

In­vest­ments in these sec­tors must be re­ported to the CFIUS if the for­eign in­vestor’s role would al­low ac­cess

non-pub­lic in­for­ma­tion or ower to nom­i­nate a board or make other sub­stan­tial s, the US Trea­sury said. S has re­jected sev­eral Chi&A deals in re­cent years in sec­tors rang­ing from high­icon­duc­tors to real es­tate. ened reg­u­la­tions on Chi­nese ent in these so-called sen­sis will limit China’s im­ports mpo­nents and in turn ac­celde­vel­op­ment of pro­pri­etary China, an in­dus­try rep­re­sen­r­named Liu told the Global n Thurs­day.

“Some ma­jor Chi­nese de­vice and equip­ment providers such as Huawei and ZTE have al­ready clas­si­fied for­eign com­po­nent sup­pli­ers into US and non-US, and they are get­ting fully pre­pared,” he said, not­ing that the ZTE cri­sis has brought Chi­nese tech­nol­ogy com­pa­nies and do­mes­tic chip­mak­ers much closer.

“Be­fore, Chi­nese firms gave pri­or­ity to for­eign com­po­nents. Now Chi­nese chip­mak­ers will have more op­por­tu­ni­ties to put their self-de­vel­oped prod­ucts into the mar­ket,” he said.

ZTE, which was se­ri­ously af­fected by a trade ban on core com­po­nents by the US gov­ern­ment this year and has a large busi­ness pres­ence in the US, de­clined to com­ment on the new US poli­cies.

Chi­nese hard­ware provider Huawei Tech­nolo­gies is one of the Chi­nese firms that have been striv­ing to de­velop pro­pri­etary chips to re­duce reliance on for­eign sup­pli­ers.

After years of de­vel­op­ment in niche sec­tors such as cloud ser­vices, some par­tic­u­lar chipsets de­signed for tar­geted ar­ti­fi­cial in­tel­li­gence sce­nar­ios have be­come scarce and ex­pen­sive, “which prompted us to de­velop our own chipsets,” Xu Wen­wei, Huawei’s chief mar­ket­ing of­fi­cer, said dur­ing a press con­fer­ence on Thurs­day in Shang­hai.

“We need some chips for edge de­vices that have low power con­sump­tion, but only a few choices are avail­able in the mar­ket,” he said.

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