Beijing ‘has no problem’ with Donald Trump’s softer tone over Chinese investments in US

Chinese government will be satisfied with Washington’s proposals ‘as long as they don’t discriminate against us’

PUBLISHED : Thursday, 28 June, 2018, 2:13pm
UPDATED : Thursday, 28 June, 2018, 11:29pm

Beijing is happy with Donald Trump’s softer stance on Chinese investments in the US, a senior official said on Thursday, because his new proposals do not single out Chinese companies.

Xiao Yaqing, the chairman of the Asset Supervision and Administration Commission, the regulator of the biggest state industrial conglomerates, said the Chinese government would not be angry “as long as they don’t discriminate against us”.

On Wednesday Trump backed away from a threat to directly target Chinese investors as part of an effort to prevent the acquisition of advanced technologies that threatened US national security.

Donald Trump softens threat of new curbs on Chinese investment in US firms

“We don’t see any problem … we always follow international rules and the laws of the investment destination countries,” Xiao told reporters on the sidelines of a conference on Belt and Road Initiative in Hong Kong in reply to a question over possible stricter screening of Chinese investments in the US.

Xiao’s comments may signal a further easing in hostilities between the world’s two largest economies following Trump’s shift.

The US President said on Wednesday that he would rely on improvements to the current rules and proposals to strengthen the mandate of the Committee on Foreign Investment in the United States to restrict the transfer of US technology to China.

Earlier US media had reported that Trump would sign an executive order specifically targeting Chinese investors looking to acquire technology in sectors such as new-energy vehicles, robotics and aerospace.

The Chinese government had expressed its concerns over the reports amid fears that they would escalate tensions between the two sides amid the current stand-off over tariffs.

While Beijing is able to retaliate over import tariffs, it would be more difficult to do so if the White House were to restrict Chinese investments in America because it is still eager to woo foreign investors, including from the US.

In Beijing, China’s commerce ministry stressed on Thursday that it opposed using national security as grounds to restrict foreign investments.

“China will closely monitor the legislation process and evaluate its potential impact on Chinese companies,” Chinese commerce ministry spokesman Gao Feng told reporters in a regular briefing.

Beijing ‘closely watching’ Trump’s plan to restrict Chinese investments

A major purpose of Xiao’s agency is to supervise the country’s largest state-owned enterprises, including oil companies, nuclear companies and electricity generation groups.

These state-owned giants, along with their numerous subsidiaries, also serve as an arm of the Chinese government in extending Beijing’s economic influence abroad, particularly in Asia and Africa where scrutiny of Chinese state enterprises is limited.

Xiao said in his main speech to the conference that the 97 enterprises under his agency’s direct supervision have invested in over 1,700 projects over the past five years as part of the Belt and Road Initiative, a strategy to boost Chinese regional clout via trade and investment.

Direct investments in the US by Chinese state-owned enterprises remain limited, partly because of Washington’s mistrust.

Meanwhile, trade tensions between the two countries remain high, with 25 per cent tariffs on US$34 billion worth of Chinese products due to come into force next week.

Xiao told the Belt and Road Summit, a conference organised by the Hong Kong government and Hong Kong Trade Development Council, that “protectionism, unilateralism and a zero-sum game mentality” would only lead to“dead ends”, but did not explicitly refer to either Trump or the United States.