White House announces that USA will not impose limits on Chinese investment

Neal Hudson 
Nationwide UK house price indexannual change 2%year to date 2

Neal Hudson Nationwide UK house price indexannual change 2%year to date 2

The administration will still impose $34 billion in tariffs on Chinese goods effective July 6, and China has pledged to retaliate.

"Peter Navarro lost, and Steve Mnuchin won, and we ended up with what's actually a good policy", said Rod Hunter, a lawyer who served as an economic official on the National Security Council in President George W. Bush's administration.

This was after US President Donald Trump said his administration would rely on a strengthened national security review panel to deal with concerns about foreign interests buying sensitive US technologies.

White House economic adviser Larry Kudlow told reporters the administration remains in communication with its Chinese counterparts.

Chinese private equity firm Canyon Bridge Capital Partners' proposal to buy United States chip maker Lattice Semiconductor Corp for US$1.3 billion and Ant Financial's attempt to buy MoneyGram International for US$1.2 billion were both blocked by Trump on CFIUS' recommendation. "The ball's in their court".

Mnuchin and others in the administration argued that employing an improved CFIUS rather than a stricter blanket policy would give the US more flexibility in trade negotiations with China, according to a person familiar with the discussions.

FILE PHOTO: U.S. President Donald Trump speaks during a lunch meeting with Republican members of Congress at the White House in Washington, U.S., June 26, 2018.

Trump also said that he has directed Commerce Secretary Wilbur Ross to examine USA export controls and recommend modifications that may be needed "to defend our national security and technological leadership". "The NEC is at the center of all the action regarding the economy, both domestically and internationally" he said, noting he will make a decision "very soon".

"Therefore, upon enactment of FIRRMA legislation, I will direct my administration to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies identified in the Section 301 investigation".

A strong CFIUS enhanced by the Act will deter foreign investments that risk exposing sensitive United States technology to theft or other forms that compromise it, said the official.

"We have to protect these companies".

"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.

United States stocks traded higher on Wednesday morning after Trump announced the new approach to USA investment restrictions. While CFIUS reviews are technically voluntary, the bill would require foreign investors that are at least 25 percent owned by foreign governments to go through CFIUS when they are acquiring at least a 25 per cent stake in a USA business.

"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.

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