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The Treasury Department plans to intensify the review of Chinese investments in sensitive US industries under an emergency law, putting Washington's trade war with Beijing on a potentially irreversible trajectory .
According to the plan, the White House would use one of the most important legal measures available to declare China's investment in US companies involved in technologies such as new energy vehicles, robotics and the like. Aerospace a threat to economic and national security. with the plans.
Photographer: Andrew Harrer / Bloomberg
Treasury Secretary Steven Mnuchin, in a report scheduled for June 29, will propose administering this law through an inter-agency government group called the Foreign Investment Committee in the United States, or CFIUS, said the population under the guise of anonymity. plans.
A spokesman for the Treasury did not immediately respond to a request for comment. The Chinese Ministry of Commerce did not immediately respond to the Bloomberg inquiry about the report on the US planned investment restrictions.
One concept under study would be to create a two-way CFIUS process to review investments, with a specific process for China, said two people.
"It is now clear that Trump's policy is not about the trade deficit," said Raymond Yeung, chief economist of China for Australia & New Zealand Banking Group Ltd. in Hong Kong. "Security risks can be applied to all aspects of a bilateral relationship, especially investment restrictions".
Mnuchin has been working on the plans since December, even though he has pleaded for a less aggressive approach. In the end, he was persuaded by other Cabinet members and the President to use blunt tools to deal with the growing national security risks associated with Chinese investments, people said.
The head of the Treasury has kept a low profile in recent weeks. People familiar with Mnuchin's thought have said that after losing an internal battle over how to handle the trade dispute with Beijing, he is signaling his disagreement with the president's approach through silence.
Some senior administration officials worry that the declaration of a national economic emergency could hurt the stock market or hurt US companies operating in China, did they? added.
The South China Morning Post reported on Sunday that China did not intend to target US companies operating in the country due to escalating trade tensions, but additional measures on the part from the White House could change this assessment.
The national emergency law, called the International Emergency Economic Powers Act of 1977, will target potential investments, which means that existing investments can not be canceled, according to four people. We do not know what would happen to the transactions that have been announced but not yet completed. Treasury officials are trying to agree on the legal definition of "Chinese entities" that would be affected.
The Treasury Department is working on rules to block companies with at least 25 percent Chinese ownership by buying companies with "technology of industrial importance," the Wall Street Journal reported, citing people familiar with the plans. The final limit may end up being lower than that, and the administration is also working on export controls to stop US technology being exported to China, according to the population.
Manifesto of Navarro
Trump's chief commercial advisor, Peter Navarro, has laid the groundwork for intensifying what he calls a "trade dispute" here.
Navarro recently released a 36-page report on "How China's economic aggression threatens technologies and intellectual property of the United States and the world". The report is considered part of the evidence that the administration will use to justify the investment restrictions. courses.
Much of China's "behavior constitutes economic aggression," Navarro said at a phone briefing with reporters. "It is essential both for the interests of the United States as well as for the integrity and smooth functioning of the global economy that the Chinese stop this kind of behavior."
The Treasury's decision is part of the Trump administration's Article 301 action to respond to China's alleged intellectual property theft and follows a series of tariff threats between the two largest economies.
The status of IEEPA allows the president to unilaterally impose investment limits. The Congress, in parallel, is working on reform legislation at CFIUS, which would look at incoming investment in the US for reasons of national security.
People familiar with the plans of the administration said that the Treasury's investment limits are seen as complementing CFIUS's reform efforts, which are not only focused on China and do not limit investment for reasons of economic security.
People informed about the latest action said that the Treasury limits will be deployed in several phases, which means that all sectors of Made in China 2025 will not be covered at the same time.
– With the help of Enda Curran and Miao Han
(Adds the Wall Street Journal report on investment limits in paragraph 12.)
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