China tech investments in U.S. new target in trade clampdown
WASHINGTON — Already threatened by escalating U.S. taxes on its goods, China is about to find it much harder to invest in U.S. companies or to buy American technology in such cutting-edge areas as robotics, artificial intelligence and virtual reality.
President Donald Trump is expected as early as this week to sign legislation to tighten the U.S. government’s scrutiny of foreign investments and exports of sensitive technology.
The law, which Congress passed in a rare show of unity among Republicans and Democrats, doesn’t single out China. But there’s no doubt the intended target is Beijing. The Trump administration has accused China of using predatory tactics to steal American technology.
“As a policy signal, it speaks with a very loud voice,” said Harry Clark, head of the international trade practice at the law firm Orrick. “Leading decision makers and Congress are very concerned about technology transfer to China.”
The Trump administration has already imposed tariffs on $34 billion in Chinese exports and it announced Tuesday that it will go ahead with another $16 billion worth starting Aug. 23. Trump has threatened to target an additional $200 billion worth.
The new law strengthens reviews of foreign investment by the existing Committee on Foreign Investment in the United States, which is led by Treasury Secretary Steven Mnuchin. The committee can now review any investments that grant foreigners access to a U.S. company’s high-tech trade secrets. Before the change, such reviews were done only when a foreigner gained control of a company.
The new law also gives the com-
mittee oversight of real estate deals that are deemed to pose a national security risk, and it will also crack down on deals that appear structured to evade such oversight.
Congress is also directing the committee to go beyond specific cases to identify patterns in foreign investment — if, for example, Chinese companies are acquiring a specific technology — and to work with U.S. allies that share its concerns about Beijing.
The new law strengthens the Commerce Department’s oversight of hightech exports, and government agencies will identify sensitive “emerging and foundational technologies” that will be subject to tougher export controls.
The crackdown reflects a sharp reversal in U.S. attitudes toward Chinese investment. From virtually nothing in 2000, Chinese direct investment in the United States reached a record $46 billion in 2016, according to the Rhodium Group research firm.
Chinese investors sank money into U.S. companies involved in artificial intelligence, robotics and blockchain technology, which is used to do business in cryptocurrencies. China has made clear its intent to nurture homegrown Chinese companies that will contend for global dominance in such fields as electric cars, robotics and medical devices.