White House decides against outright limits on Chinese investment

White House decides against outright limits on Chinese investment

White House decides against outright limits on Chinese investment

"We are not singling out China", Treasury Secretary Steven Mnuchin told CNBC on Wednesday following the administration's announcement. In response, China is prepared the same day to slap tariffs on billions in US exports, including soybeans - a direct threat to Trump supporters in America's heartland.

The Trump administration will not impose blanket restrictions on Chinese investment in the US but will instead rely on enhancements to an existing review process in an effort to protect the country's sensitive technology know-how.

The US House of Representatives on Tuesday approved a bill that would make changes to the committee's law.

Trump in a statement said the Foreign Investment Risk Review Modernisation Act (FIRRMA), will enhance American ability to protect the country from new and evolving threats posed by foreign investment while also sustaining the strong, open investment environment to which the USA is committed, and which benefits its economy and people.

The strategy is a less confrontational approach toward China than many had expected. Some anticipated the USA would block takeovers of US companies by any company with at least 25 percent Chinese ownership.

DeBusk said that trade tensions have driven the United States stock market down and said that Trump might be seeking a way to avoid "a potentially catastrophic" trade war with China. By opting for the expanded use of CFIUS instead of new controls on Chinese investment, Trump appears to be trying to ease the tensions between the two sides slightly.

The Senate Banking Committee also approved a version of the reform, so the two chambers will have to reconcile them into a single bill for Trump to sign.

China's commerce ministry says it objects to the USA using national security as an excuse to tighten the rules for Chinese companies in the US.

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A May 29 statement from the White House pledged "specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology". "It's confused the Chinese about what the US really wants".

"At the end of the day, all the president's advisers were 100 per cent unanimous when we sat down with the president", Mnuchin said.

"I have concluded that such (CFIUS) legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity", Trump said in a statement that did not specifically name China.

Officials had considered limiting Chinese-owned companies from acquiring more than 25 percent of American firms that own sensitive technologies, and reaction to the easing from one prominent Republican was negative.

Chinese investment in the USA has taken a big hit since Donald Trump became president.

Xiao Yaqing, the chairman of the Asset Supervision and Administration Commission, the regulator of the biggest state industrial conglomerates, said the Chinese government would not be angry "as long as they don't discriminate against us".

Trump campaigned for the White House on a pledge to take a much more aggressive stance with China and other trading partners.

Mnuchin told reporters that the differences among Trump's advisers had been overblown.

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