US Treasury meets business groups to tighten screws on Chinese investment
The latest draft of legislation would tighten scrutiny of foreign investment, limiting Chinese efforts to acquire sophisticated US technology
US Treasury officials are meeting with about 10 industry groups on Monday to discuss the latest draft of legislation that would tighten scrutiny of foreign investment to limit Chinese efforts to acquire sophisticated US technology, three sources familiar with the meeting said.
The Treasury Department supports the bill, which is now in the Senate, and a companion measure in the US House of Representatives that would broaden the reach of the inter-agency Committee on Foreign Investment in the United States (CFIUS).
Corporate America has taken a keen interest in the bill because it would give CFIUS the power to further restrict Chinese investment in US companies.
It could also potentially lead the Chinese to retaliate and restrict US companies’ access to the world’s second-largest economy.
Tightening the CFIUS process is one of several efforts supported by the Trump administration, including tariffs on steel and aluminium, to establish a more protectionist stance in an effort to tamp down imports from China while raising the regulatory bar on what deals get approved.
Attendees include the most powerful US business lobbying group, the US Chamber of Commerce, a source familiar with the meeting said.
A Treasury spokesperson declined to comment on the meeting, adding that the department is “prohibited by statute from publicly disclosing information filed with CFIUS”.
What you need to know about the US panel that can stop deals from transferring cutting-edge tech to China
A draft of the bill to be discussed in the meeting would eliminate a measure which some tech companies complained would force them to seek CFIUS approval for technology sales if they involved intellectual property licensing and support.
The draft also spells out that an investment fund can be passive and avoid being subject to CFIUS oversight, even if there are foreign investors, as long as investment decisions are made by Americans and the decision on hiring those Americans is also made by Americans.
Investment funds had complained that under an older version of the bill they could be subject to CFIUS if they managed Chinese money and wanted to invest in certain companies with high-end technology.
The draft also defines passive investment as “direct or indirect”, but strikes a measure that says passive investors may be subject to a CFIUS review if they have access to non-technical information.
Any access to technical information would remain subject to CFIUS oversight.
Treasury oversees CFIUS, whose remit is all foreign investments into the United States, including equity investments.
Under pressure from technology companies and others, the bill has already undergone a number of changes to soften its approach.
Negotiators in the administration, on Capitol Hill and working for the investment and high-tech industries are on their fourth version of a CFIUS bill. It has undergone at least one proposed revision that would seek to narrow its scope.