Trump softens investment stance toward China
The move raises the possiblity of negotiated end to looming tariffs
WASHINGTON — President Donald Trump de-escalated a confrontation with China on Wednesday, dropping plans to impose strict limits on Chinese investment in U.S. technology companies and instead urging Congress to strengthen existing laws that apply to all foreign countries.
The administration’s more conciliatory stance raised at least the possibility that the two sides could work toward a negotiated end to the punishing tariffs they’re set to impose on each other’s goods beginning July 6.
The top White House economic adviser said the two sides are “in communication.” And analysts said they took heart that the administration had offered some semblance of an olive branch to Beijing.
“It seems like this move is being undertaken with the goal of coming to a resolution ultimately on the trade policy issues the U.S. has with China,” said Stephen Ezell, who manages global innovation policy at the Information Technology and Innovation Foundation think tank.
Last month, the White House said that by the end of this week, it would announce tight new curbs on Chinese investment. The idea was to prevent stateowned or politically connected Chinese companies from buying advanced U.S. technology. Beijing is seeking such technology as part of its “Made in China 2015” initiative, a roadmap to its goal of becoming a global tech leader.
But on Wednesday, the Trump administration announced a less-draconian approach: It would work with Congress to strengthen reviews of foreign investment under the existing Committee on Foreign Investment in the United States, or CFIUS, led by Treasury Secretary Steven Mnuchin. CFIUS applies to all countries — not just China — and its reviews are con-
ducted on a case-by-case basis.
“Defining technology that is ‘off limits’ is an exceedingly difficult task,” said Christopher Brewster, a senior member of the CFIUS practice at the law firm Stroock & Stroock & Lavan. “For this reason, broad-scale investment restrictions are a clumsy tool that inherently run the risk of being over-inclusive or under-inclusive. Using the CFIUS process is a more nuanced approach.”
The House has approved a bill to strengthen the CFIUS law, and the bill will likely be considered by a HouseSenate conference committee.
Asked about the administration’s shift, Mnuchin told reporters, “It is not a question of whether we are focusing on China or we are not focusing on China” but an issue of using all means to address trade disputes with Beijing.
“For those who want to say this is being weak on China, the answer is no,” Mnuchin said. “The question was, What were the appropriate tools?”
Trump campaigned on a pledge to take a much more aggressive stance with China and other trading partners. The United States last year posted a $552 billion trade deficit with the rest of the world — $336 billion with China alone.