President Trump has opted for a softer approach to restricting Chinese investment in sensitive U.S. technologies, backing bipartisan legislation expanding an existing government process for reviewing such deals from China and other nations.
Trump is following a recommendation from the Treasury Department to use an enhanced version of the Committee on Foreign Investment in the United States, or CFIUS, review process to protect U.S. national security interests from strategic foreign investments designed to help other nations acquire sensitive technologies, senior administration officials said Wednesday.
Bipartisan legislation expanding the review process has passed the House and Senate and the two versions now must be reconciled by lawmakers.
Trump sided with Treasury Secretary Steven T. Mnuchin over other administration officials urging a tougher approach targeted specifically at Chinese attempts to acquire U.S. technologies.
The decision could be viewed as an olive branch to China as the two nations battle in an escalating trade war. That line was tempered late in the day, however, when Larry Kudlow, director of the National Economic Council, said in an interview with Fox Business Network that the stance should not necessarily be viewed as softer. Markets swooned in response.
A spokesman for China’s Ministry of Commerce said earlier Wednesday that they "are aware of the U.S. side's close attention to the proposed investment restrictions and will assess the potential impact on Chinese enterprises."
Speaking to reporters on Tuesday, Trump suggested he would opt for the expanded CFIUS review process. His comments came after reports on Monday — shot down by Mnuchin — that the administration was preparing tougher steps to specifically bar Chinese companies from investing in U.S. technology firms and to block technology exports to China.
“We have the greatest technology in the world. People copy it and they steal it,” Trump said. “And we have to protect that, and we're going to protect it. And that's what we were doing. And that can be done through CFIUS. We have a lot of things we can do it through. And we're working that out.”
The Foreign Investment Risk Review Modernization Act would expand the U.S. government’s review process for investments in U.S. technology.
“Should Congress fail to pass strong FIRRMA legislation that better protects the crown jewels of American technology and intellectual property from transfers and acquisitions that threaten our national security — and future economic prosperity — I will direct my administration to deploy new tools, developed under existing authorities, that will do so globally,” Trump said in a written statement Wednesday.
That CFIUS review process was used in March to block a bid by Singapore’s Broadcom to takeover San Diego chipmaker Qualcomm. The Trump administration said it was concerned the deal would result in the U.S. ceding ground to China in semiconductors and mobile technology.
Senior administration officials, speaking on condition of anonymity, said Wednesday that the congressional legislation would strengthen controls over foreign investment while maintaining an open U.S. investment climate.