U.S. PLANS CURBS ON CHINA INVESTMENTS
Security risks cited for law that will affect sensitive industries
THE Treasury Department is planning to heighten scrutiny of Chinese investments in sensitive United States industries under an emergency law, putting Washington’s trade war with Beijing on a potentially irreversible course.
Under the plan, the White House would use one of the most significant legal measures available to declare China’s investment in the US companies involved in technologies such as new-energy vehicles, robotics and aerospace a threat to economic and national security, according to eight sources.
Treasury Secretary Steven Mnuchin, in a report to be released on Friday, will suggest administering that law through an inter-agency government panel called the Committee on Foreign Investments in the US (CFIUS), said the people.
China’s Commerce Ministry didn’t respond to inquiry.
One concept under review would be to create a two-tracked CFIUS process to review investments, with one specifically for China, said two sources.
“It is now clear that Trump’s policy is not about the trade deficit,” said Raymond Yeung, chief greater China economist for Australia & New Zealand Banking Group Ltd. “Security risks can be applied to every aspect in a bilateral relationship, investment restrictions in particular.”
Mnuchin had been working on the plans since as early as December, though he’d argued for taking a less aggressive approach, said the people. In the end, he had been persuaded by other members of the Cabinet and the president to use blunt tools to address growing national security risks from Chinese investments, said the people.
The Treasury chief has kept a low profile in recent weeks. People familiar with Mnuchin’s thinking said that after he lost an internal battle on how to handle the trade dispute with Beijing, he had been signalling his disagreement with the president’s approach through silence.
Some administration officials were concerned that declaring a national economic emergency could hammer the stock market or hurt US firms operating in China, they said.
The South China Morning Post reported on Sunday that China had no plan to target US companies operating in the nation amid escalating trade tensions, but additional steps by the White House may change that assessment.