The Trump administration is considering a crackdown on Chinese investments in technologies the U.S. considers sensitive by invoking a law reserved for national emergencies, among other options, according to people familiar with the matter.
Treasury Department officials are working on plans to identify technology sectors in which Chinese companies would be banned from investing, such as semiconductors and so-called 5G wireless communications, according to four people with knowledge of the proposal, who spoke on the condition of anonymity.
The investment curbs would be the latest step in President Donald Trump’s plan to punish China for what the U.S. sees as violations of American intellectual-property rights. The president asked Treasury Secretary Steven Mnuchin to consider investment restrictions on Chinese firms after the administration released the results of its probe into China’s IP practices last week.
While investors have so far focused on Trump’s plan to impose tariffs on Chinese imports, new restrictions could deepen a slowdown in Chinese investments in the U.S. since Trump took office, hurting the ability of American companies to raise capital and holding down valuations.
‘Other Action’
“There will be limitations on foreign investment,” Commerce Secretary Wilbur Ross said Tuesday in an interview on Fox Business Network. Pending legislation in the Senate and House to bulk up the Committee on Foreign Investment in the U.S., the panel that currently reviews foreign takeovers, will be part of the response, Ross said, adding that Trump will take “other action.”
Stocks erased gains partly on concern about heightened trade tensions between the world’s largest economies. The S&P 500 Index was little changed at 11:08 a.m. New York time after earlier rising as much as 0.4 percent.
“The trade issue and uncertainty related to that is not going to fade in one day because all of a sudden we started thinking that we would reach some sort of a settlement with China,” said Krishna Memani, chief investment officer at OppenheimerFunds Inc. “This is going to be somewhat of a long process for things to settle down.”
Earlier this month, the U.S. president rejected Broadcom Ltd.’s hostile takeover of Qualcomm Inc., sending a message that his administration won’t look kindly on any deal that would give China an edge in critical technology. Although Broadcom is based in Singapore, China loomed large in the decision, because Qualcomm is locked in a race with China’s Huawei Technologies Co. to dominate the development of next-generation wireless technology.
Last year, Trump blocked the takeover of chipmaker Lattice Semiconductor Corp. by a private-equity firm backed by a Chinese state-owned asset manager.
‘Deemed Important’
Trump gave Mnuchin 60 days from March 22 to propose executive actions the president can take to address concerns about Chinese investments in industries or technologies “deemed important” to the U.S.