The administration decided not to employ the International Emergency Economic Powers Act of 1977 that would give the president broad authority to curb Chinese investments in the country.
Instead, it will rely on Congress to strengthen an existing government body that evaluates individual corporate deals for national security risks, senior administration officials told reporters early Wednesday.
The investment restrictions are part of the administration's efforts to pressure Beijing into making major changes to its trade, technology transfer and industrial subsidy policies after United States complaints that China has unfairly acquired American intellectual property through joint venture requirements, unfair licensing and strategic acquisitions of U.S. tech firms.
The president, he said, has led on the issue of foreign competitors, principally from China, which is aggressively acquiring sensitive USA technologies.
Therefore, upon enactment of FIRRMA legislation, I will direct my Administration to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies identified in the Section 301 investigation. The legislation expands the scope of transactions reviewed by the interagency panel to address security concerns, Trump said.
Treasury Secretary Steven Mnuchin is optimistic on US economic growth.
Chinese private equity firm Canyon Bridge Capital Partners' proposal to buy U.S. chip maker Lattice Semiconductor Corp for US$1.3 billion and Ant Financial's attempt to buy MoneyGram International for US$1.2 billion were both blocked by Trump on CFIUS' recommendation. The committee's powers are likely to be strengthened through legislation that is now pending in Congress.
White House officials say that in addition to the decision to protect USA 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. The Treasury Secretary is the head of CFIUS.
But it will likely do little to stop the activation of US tariffs on $34 billion worth of Chinese goods, scheduled for July 6, or jump-start trade negotiations between the two economic superpowers, Kennedy said.
The House has approved a bill to strengthen the CFIUS law, and the bill will likely be considered by a House-Senate conference committee for a Senate-approved defense measure.
"One of the problems of CFIUS before was we could block an acquisition, but then a company could go form a joint venture and we couldn't block that", Mnuchin said in an interview with CNBC. That anxiety has been somewhat alleviated as Congress and the president look to protect critical U.S. technology.
"It's going to be very comprehensive and very effective at protecting our technological family jewels in the United States".
A strong CFIUS enhanced by the Act will deter foreign investments that risk exposing sensitive U.S. technology to theft or other forms that compromise it, said the official.