Trump Administration Opts for Softer Approach on Chinese Investment in U.S. Technology

Mnuchin rebuts reports on new China investment restrictions

The Trump administration has backed away from a plan to use executive authority to crack down on Chinese investment in important American technology, opting to rely on existing laws currently being updated by Congress.

The decision is a victory for Treasury Secretary Steven Mnuchin, who had advocated for using the Committee on Foreign Investment in the U.S. to address concerns over foreign investment in technology, over trade hawks inside the White House and the administration. The Treasury Secretary is the head of CFIUS.

Some of administration officials had argued for more stringent restrictions, according to a person familiar with the matter. Those could have included a strict prohibition on companies with 25 percent Chinese ownership from investing in any company involved in what the White House calls “industrially important technology.”

White House officials say that in addition to the decision to protect U.S. technology through CFIUS, the president has instructed the Commerce Department to “assess the current export regime” to determine if rules about sharing important technologies with other countries. should be tightened.

While White House officials stressed that they were taking a “tough” approach with respect to China and technology, the move is seen inside the administration and outside as a softer policy than what looked likely as recently as last week.

Mnuchin and others in the administration argued that employing an improved CFIUS rather than a stricter blanket policy would give the U.S. more flexibility in trade negotiations with China, according to a person familiar with the discussions. Critics of that approach pointed out that little to no progress has been made in trade talks with China and that a stronger stance would be more likely to convince China’s leadership to change their predatory trade practices.

The decision caps a chaotic few days in which the administration’s divisions on China broke out into a public dispute, with Secretary Mnuchin openly being contradicted by White House trade adviser Peter Navarro.


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