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US: Trump administration to block Chinese tech Investments

 |  June 25, 2018

The US Treasury Department is reportedly gearing up to announce rules that would prevent companies with 25% or more Chinese ownership from purchasing a US company that has “industrially significant technology,” Reuters reported.

Reuters, citing a government official briefed on the matter, reported that the threshold could change before an official announcement is made, which is expected to be announced Friday, June 29. It’s the latest move in President Donald Trump’s trade fight with China. Earlier in the year Trump announced plans to slap tariffs on billions of dollars of Chinese products, with the first US$34 billion worth of tariffs on Chinese products taking effect on July 6. According to Reuters, the investment restrictions will be focused on certain sectors—including China’s Made in China 2025 plan, in which it aims to enhance its expertise in advanced information technology, aerospace, marine engineering, pharmaceuticals, advance energy vehicles, robotics and other high tech areas.

The government official told Reuters that the Treasury would use the International Emergency Economic Powers Act of 1977 to put the limits on foreign ownership by a Chinese company. That act gives the president the authority to prevent deals based on national security concerns.  According to Reuters, on May 29, the Trump Administration said it was moving ahead with restrictions on the part of Chinese companies in the U.S. and more export controls for goods exported there with details expected to be provided by June 30.

In April, Reuters reported that while government reviews for national security reasons have been focused on investment deals and takeovers, an expanded effort to look at tech partnerships is being urged by some members of Congress and the Trump Administration, who are concerned about the theft of intellectual property and technology being transferred abroad. AI is of particular interest because it has uses for the military, sources told Reuters. The US government could also increase scrutiny of the semiconductor and self-driving markets, although the idea is in the early stages and may not move forward. But if there was an effort to end partnerships between Chinese and US-based technology companies, it could have an impact across the entire tech landscape.

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