US to control investment from China

By Xie Jun Source:Global Times Published: 2017/10/30 22:08:41

New bill won’t have big impact on relations: experts

Chinese workers manufacture solar panels at a plant in Lianyungang, East China's Jiangsu Province in August 2016. Photo: IC


Graphics: GT

The US government's efforts to ratchet up supervision on investments from China will not fundamentally change the two countries' economic relations as there are more areas of common ground than friction, Chinese experts told the Global Times on Monday.

The US government will shortly reveal new legislation that will strengthen scrutiny on overseas investments, particularly those from Chinese companies, according to a report by CNBC on October 25. Currently, overseas investment in the US is reviewed by the Committee on Foreign Investment in the US (CFIUS), which seeks to identify any potential national security risks.

The reform was proposed by US senator John Cornyn, who in June argued that the current CFIUS is ill-equipped to handle new threats, particularly from China, on national security issues. He also said that China has been attempting to advance its technological ability through investment, according to a statement published by US law firm Covington and Burling LLP on its official website.

According to the Covington statement, the new bill will expand the CFIUS' jurisdiction to review non-control transactions that result in access to technology, as well as expanding its authority to review overseas joint ventures.

No unified strategy

"Any mergers and acquisitions (M&As) of a company are based on the goal of attaining certain resources of that company, whether those be technologies or sales channels or market. These are normal, mutually beneficial economic activities. I think the US government's attempt to block these activities is a violation of fair competition," Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics, told the Global Times Monday.

Li Xiaogang, director of the Foreign Investment Research Center at the Shanghai Academy of Social Sciences, said that the new legislation would particularly target the high-tech sector, as the US government is concerned that China might attain its semi-conductor technologies via M&As.

"But whether the US government can meet its ends is hard to say. US companies actually welcome M&As from China, not only because of the capital brought by Chinese buyers, but because many of their end-products are sold in China," he told the Global Times on Monday.

According to Sang, the introduction of the new legislation is "one of a series of frictions" between the US and China businesswise. "They have always been there and have never ceased."

There has been market speculation that Sino-US economic relations could deteriorate as US President Donald Trump has vowed to protect the US manufacturing sector by attracting manufacturing back to the US.

In September, he blocked a proposed Chinese takeover of Lattice Semiconductor, the third-largest American producer of critical technology for US military applications, according to overseas media reports.

The Global Times contacted Fosun Group (which has acquired several US companies) and Fuyao Glass (which has set up a glass manufacturing company in Ohio). Neither replied as of press time.

According to a statement Fuyao sent to the Global Times earlier, the Ohio local government actively persuaded and encouraged Fuyao to set up companies in Ohio. "So far, the US still has not formed a clear and unified strategy for investment from China," Li noted.

More common ground

But both Li and Sang argued that the basis for economic cooperation still remains strong between the US and China. "The US would not want to lose China's capital or market," Li said.

The CNBC report noted that Chinese acquisitions of US companies were worth a total of $65 billion in 2016, more than six times the level in 2015. China's trade with the US also surged by 13.7 percent year-on-year to $423 billion in the first nine months this year, data from the National Bureau of Statistics showed on October 13.

"The countries' cooperation prospects outweigh the frictions," Li said, adding that the two countries should control their disputes through more communication.

Sang said the two countries' economic relations would not fundamentally change just because of the legislation to rein in Chinese investment.

Posted in: ECONOMY

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