President Trump said Wednesday he will no longer seek to impose new restrictions on Chinese investment in the U.S., and instead called on Congress to advance legislation aimed at modernizing the existing review process for these transactions.
Trump said the pending legislation, known as the Foreign Investment Risk Review Modernization Act, would maintain the existing open investment market while still protecting U.S. technology property. But should Congress be unable to advance the measure, Trump said he will enact more sweeping restrictions that would hit countries beyond China.
“I urge Congress to send me a strong bill as soon as possible and look forward to implementing it to protect America’s security and prosperity,” Trump said.
The decision is a victory for free-trade advocates in the administration like Treasury Secretary Steven Mnuchin, who was pushing Trump to reject any new restrictions and instead use the Committee on Foreign Investment in the United States, or CFIUS, to rule on outside investment in the country. CFIUS is the interagency panel that reviews foreign investment in the U.S. for national security threats.
The legislation from Senate Majority Whip John Cornyn of Texas would mandate that CFIUS analyze whole industries when determining whether to permit one specific transaction by a foreign entity. Opponents say the bill expands the committee’s authority too greatly and could hinder the ability for U.S. companies to invest overseas.
The measure recently passed the Senate as part of the annual legislation to fund the Department of Defense. The House advanced its own defense funding bill in May that did not include the CFIUS language, but passed a standalone bill on Tuesday that would expand the CFIUS review to non-controlling minority investments.
The Senate version could elicit some opposition in the House because of a provision that would overturn a settlement reached between the Trump administration and ZTE Corp. to lift a seven-year sales ban imposed on the Chinese telecommunications firm this year. The Trump administration said it would work with lawmakers to address that provision during conference negotiations between the two chambers.
Media reports on Sunday indicated Trump would move forward with the new restrictions. Both Trump and Mnuchin called those reports inaccurate and said any new restrictions would not be directed at one country.
In April, Trump issued an executive order calling on the Treasury Department to suggest action to “address concerns about investment in the United States directed or facilitated by China in industries or technologies deemed important to the United States.”
