US Treasury report to recommend more powers to restrict Chinese investment

US Treasury report to recommend more powers to restrict Chinese investment

Today, the US Treasury Department is scheduled to release preliminary proposals for strengthening the screening process of Chinese inbound investments

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Photo: Reuters/Thomas White

Today, the US Treasury Department is scheduled to release preliminary proposals for strengthening the screening process of Chinese inbound investments in ‘sensitive’ economic sectors.

The report is expected to recommend granting new powers to the treasury and endowing the Committee on Foreign Investment with greater authority over proposed mergers and investments. The committee’s most recent intervention in a foreign takeover concerned a hostile bid by then Singapore-based Broadcom Inc for prominent US chipmaker Qualcomm Inc, which was blocked on national security grounds.

While the Trump administration has largely been acting under national security powers to more closely scrutinise Chinese investment activity, the moves by the Treasury seek to formalise these efforts in a more permanent way. While the new powers are not expected to have an immediate impact on bilateral investment between the US and China, investment flows from China to the US have already plummetted some 90% in the first half of 2018 owing to general trade tensions.

Beijing is expected to respond by accelerating its own reforms to its investment regime.

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