Con­gress ad­vised to bar US ac­qui­si­tions by China state firms

Jamaica Gleaner - - SPORTS -

AS CHI­NESE in­vest­ment in the United States keeps set­ting records, con­gres­sional ad­vis­ers sug­gest chang­ing United States law so Chi­nese state-owned com­pa­nies can be barred from buy­ing or gain­ing con­trol of Amer­i­can busi­nesses.

The con­cern is that such en­ter­prises could use tech­nol­ogy, in­tel­li­gence and mar­ket power “in the ser­vice of the Chi­nese state”, the US-China Eco­nomic and Se­cu­rity Re­view Com­mis­sion said on Wed­nes­day in its an­nual re­port. The com­mis­sion noted, for ex­am­ple, a growth in Chi­nese at­tempts to buy US as­sets in the semi­con­duc­tor in­dus­try.

The rec­om­men­da­tion stem­ming from the se­cu­rity im­pli­ca­tions about for­eign in­vest­ment by the world’s No. 2 econ­omy was one of sev­eral pro­pos­als in the re­port, which ex­am­ines a range of is­sues in the re­la­tion­ship be­tween the pow­ers.

Chi­nese in­vest­ment in the US reached a record US$15 bil­lion in 2015 and could climb to US$30 bil­lion in 2016. About one-quar­ter of that in­vest­ment is from state-owned com­pa­nies.

“We don’t want the US gov­ern­ment own­ing large chunks of the US econ­omy, so why do we want the Chi­nese Com­mu­nist Party own­ing large chunks of the US econ­omy?” said Den­nis Shea, the Repub­li­can-ap­pointed chair­man of the bi­par­ti­san com­mis­sion.

“These state-owned en­ter­prises are arms of the Chi­nese state and Com­mu­nist Party. Of­ten, they do not act purely on com­mer­cial or mar­ket ba­sis, they have strate­gic con­sid­er­a­tions,” he said.

The re­port urges Con­gress to amend the statute au­tho­ris­ing the Com­mit­tee on For­eign In­vest­ment in the United States, known as CFIUS, to pro­hibit Chi­nese state-owned en­ter­prises “from ac­quir­ing or other­wise gain­ing ef­fec­tive con­trol of US com­pa­nies.”


That com­mit­tee re­views for­eign ac­qui­si­tions for threats to US na­tional se­cu­rity.

A Fe­bru­ary re­port by the Rhodium Group, a re­search or­gan­i­sa­tion that tracks Chi­nese in­vest­ment in the US, said that for the past three years, China was the coun­try with the most trans­ac­tions scru­ti­nised by the com­mit­tee. Rhodium said that was not due to in­creased scru­tiny of China, but rather re­flected an in­crease in the vol­ume of for­eign in­vest­ment from China and a shift in its in­ter­est to­wards tech­nol­ogy ac­qui­si­tions.

“The vast ma­jor­ity of Chi­nese over­tures con­tinue to pass CFIUS re­views with­out any prob­lems,” re­searchers said. Ac­cord­ing to Rhodium, an­nual in­vest­ment flows from China to the US have ex­ceeded Amer­i­can in­vest­ment flows into China since 2015.

China has long com­plained that Wash­ing­ton’s se­cu­rity re­view process for in­vest­ments in the US un­fairly tar­gets Chi­nese in­vestors.

Carolyn Bartholomew, the Demo­crat­i­cap­pointed vice-chair­man of the re­view com­mis­sion, said that while China re­stricts for­eign in­vest­ment with laws ban­ning for­eign par­tic­i­pa­tion in large swathes of its econ­omy, Chi­nese com­pa­nies face no such ob­sta­cles in the US.

“Peo­ple need to take a harder look at what com­pa­nies are in­vest­ing in the United States, why they are in­vest­ing in the United States,” she said. “We just think that peo­ple are not pay­ing enough at­ten­tion to this.”

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