US President promises tougher security review panel to curb Chinese investments in American tech
American President Donald Trump has vowed to utilise a strengthened security review process in an effort to deal with the ‘threat’ posted by Chinese firms acquiring US technologies and companies.
The move is not as severe as first thought, as President Trump was reportedly considering implement China-specific restrictions.
It comes after President Trump blocked Broadcom’s attempted hostile takeover of American firm Qualcomm in March.
At the time President Trump cited “credible evidence”that indicated if Singapore-based Broadcom were allowed to buy Qualcomm it “might take action that that threatens to impair the national security of the United States”.
And now according to Reuters, Trump has said on Wednesday that he will use a strengthened security review process to deal with threats from Chinese investments to acquire US technologies.
His decision came after the US Treasury Department recommended that Trump use the Committee on Foreign Investment in the United States (CFIUS) to control these types of transactions.
Trump intends to do this, but is pushing new legislation in Congress to enhance the authority of CFIUS.
The legislation, called the ‘Foreign Investment Risk Review Modernization Act’, apparently expands the scope of deals reviewed by the interagency panel to effectively address national security concerns.
“I have concluded that such legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity,” Trump is reported as saying in a statement.
Trump also threatened that if Congress fails to pass the legislation quickly, he would direct the administration to implement new restrictions under executive authority that could be applied globally.
Trump also said that upon final passage of the legislation, he will direct his administration “to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies.”
President Trump’s intervention comes amid growing concern about a trade war. But there is little doubt that US security agencies do have serious national security concerns about Chinese technology companies such as Huawei and ZTE for example.
Indeed, they have even advised American companies and individuals not to buy their products. Huawei said earlier this year it had been unable to complete a deal to sell its flagship smartphones via a US telecoms network (widely thought to be AT&T).
And it should be remembered that President Trump has blocked other deals on national security grounds since taking office.
This included the attempted $1.2bn sale of money transfer company Moneygram to China’s Ant Financial (Alibaba’s digital payments subsidiary), which was blocked in January this year by CFIUS.
Indeed, it is thought that US presidents in the past few years have blocked a total of five takeovers based on CFIUS investigations.