The White House opted to take a less confrontational approach towards Chinese investments in the US as it pushes Congress to strengt-hen an existing review pro-cess rather than invoke a little-used law reserved for economic emergencies.
President Donald Trump wants Congress to pass legislation to bolster the Committee on Foreign Investment in the US, or CFIUS, so it can prevent companies from violating intellectual-property rights of American companies, two administration officials said on Wednesday, spe- aking to reporters on the condition of anonymity.
The administration decided not to employ the International Emergency Econo- mic Powers Act of 1977 that would give the president bro-ad authority to curb Chinese investments in the country.
The decision comes amid White House allegations that China engages in widespread theft of intellectual property. The inter-agency CFIUS pan-el, if bolstered by Congress, can address those concerns while maintaining an open investment climate, one of the administration officials said.
Trump’s choice shows that he is favouring a more measured strategy that requires coordination with Congress, rather than working solely through the executive branch. It’s also a win for proponents of conciliatory tone in negotiations with China such as Treasury Secretary Steven Mnuchin, who told reporters on Wednesday that moves to strengthen CFIUS aren’t intended to single out Beijing.
“This is not intended to target China,” Mnuchin said. “It’s fair to say that certain countries will get a heightened review; I don’t think we need a list of special countries.”
CFIUS legislation passed in the House would expand investigations by the panel to include minority investments in “critical technology” or “critical infrastructure” and joint ventures where technology companies contribute intellectual property. 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 percent stake in a US business.