Investing report called ‘unfair’

Advisory panel to Congress says China’s State-owned enterprises should be barred from controlling US companies

China sharply criticized a report on Thursday by a United States panel that suggested US lawmakers ban China’s Stateowned enterprises from acquiring US companies.

Foreign Ministry spokesman Geng Shuang said the report is based on “prejudices and stereotypes” and stressed the importance of “a fair and good environment for Chinese investment”.

The US-China Economic and Security Review Commission’s annual report released on Wednesday said that the US Congress should prevent Chinese SOEs from acquiring or otherwise gaining effective control of US companies.

“The report has again revealed the commission’s prejudices and stereotypes against China,” Geng told a daily news conference in Beijing. He said he had no interest in commenting on the specifics of the report, which he called a “cliche” that has the same tone every year.

While Chinese companies are asked to abide by local laws and regulations when investing overseas, China also hopes that other countries will also play fair, he said.

China-US trade and economic cooperation is the “ballast and propeller” of the bilateral relationship, Geng said. The two countries’ interests have been closely intertwined in such a way that this relationship is important to both countries.

“The healthy, stable development of China-US trade and economic ties is in line with the fundamental interests of both countries and their people. I believe that the US side will consider the fundamental interests of its own people and adopt a policy that is conducive to bilateral trade cooperation,” he said.

Ted Moran, nonresident senior fellow of Peterson Institute for International Economics, said the Commission asserts that Chinese SOEs are a tool to advance China’s economic and national security objectives, but it does not show how SOE acquisitions of US and other foreign firms threatens US national security.

“For example, CFIUS concluded that Chem China’s acquisition of the Swiss firm Syngenta did not pose a national security threat to the US, even though Chem China is a state-owned enterprise,” Moran said. “The Commission would have to persuade Congress why it makes sense to undertake a fundamental change in the CFIUS mandate.”

Earlier this month, 12 US senators urged the Committee on Foreign Investment in the United States to reject a Chinese aluminum company’s proposal to purchase a US aluminum products maker, on grounds that it would damage the US defense industrial base.

The report comes at a sensitive time as president-elect Donald Trump’s transition team is preparing its trade and foreign policy agenda and vetting candidates for key economic and security positions. During the presidential campaign, Trump targeted China frequently and threatened to impose stinging tariffs.

However, experts noted that the advisory report is not legally binding.

Almost all of the commission’s reports on China are negative, said Li Haidong, a professor of US studies at China Foreign Affairs University. “The US should stop treating normal investment as a political and national security issue. Although some US political elites call for imposing restrictions on China’s investment, proposals are different from concrete deeds.”

Since Trump’s top priority as president will be to improve the US economy and employment, “trade and economic cooperation with China is especially important in this regard”, Li said.

“The commission is just a sub-organization of the Congress,” said Tao Wenzhao, a researcher of Sino-US relations at the Chinese Academy of Social Sciences. Tao said he does not believe it will influence Washington’s trade policy.

The 27th China-US Joint Commission on Commerce and Trade will be held in Washington, DC, next week and Vice-Premier Wang Yang will attend.

The report... revealed the commission’s prejudices and stereotypes against China.” Geng Shuang, Foreign Ministry spokesman