WASHINGTON (Reuters) – U.S. Treasury Department is said to be drafting curbs that will block any tech firms with at least 25% Chinese ownership from investing in US tech companies with “industrially significant technology” in a bid to protect the transfer and theft of intellectual property by China.
U.S. and Chinese Flags side by side FILE PHOTO – A Chinese woman adjusts a Chinese national flag next to a U.S. national flag. Credit: REUTERS/Ng Han Guan/Pool
Speaking to the National Trade Council Director Peter Navarro insisted that the Admin/US will defend against intellectual property theft (while denying reports the Admin intends on limiting Chinese investment) in US tech companies. its
If true, the move will mark another escalation of the trade conflict over tariffs with Trump Administration with Chinese, a move which threatens to upset financial markets and affect global growth.
Tariffs on $34 billion worth of Chinese goods, the first of a potential total of $450 billion, are due to take effect on July 6 over U.S. complaints that China is misappropriating U.S. technology through joint venture rules and other policies.
US President Donald Trump (5th L) and Chinese President Xi Jinping (5th R) hold an expanded bilateral meeting at the Mar-a-Lago estate in West Palm Beach, Florida on April 7, 2017. / AFP PHOTO / JIM WATSONJIM WATSON/AFP/Getty Images
According to a U.S. Treasury official, the investment restrictions are expected to target key sectors which the Chinese government is trying to develop as part of its broader industrial plan “Made In China 2025”. Among these are aerospace, advance information technology, robotics, pharmaceuticals, marine engineering, advanced energy vehciles as well as other high tech industries.
The U.S. Commerce Department and National Security Council are also said to be proposing “enhanced” export control to keep such technologies from being shipped to China.
U.S. President Donald Trump and Chinese President Xi Jinping during G20 Summit in Hamburg, Germany in July 2017. Credit: AFP/Getty Images
The same official said the Treasury Department would invoke the International Emergency Economic Powers Act of 1977 (IEEPA) to devise the restrictions.
The act gives the President sweeping authority to restrict assets based on National Security concerns. IEEPA was invoked broadly after the 9/11 attacks in 2001 to cut off financing for terrorist networks.
The Wall Journal said the Trump Administration would look only at new deals and would not try to unwind existing ones, adding that the planned investment bar would not distinguish between Chinese state-owned and private companies.
On May 29, The White House said the Administration would press ahead with restrictions on investment by Chinese companies in the United States as well as “enhanced” export controls for goods exported to China, with details to be announced by June 30.
It also said it would unveil a revised list of Chinese goods for tariffs, which it did on June 15.
A Reuters original report. Further editing by Manyika Review.
