I am so surprised, I can't believe that they would roll over...

White House softens plans to block Chinese investment

By DOUG PALMER and LORRAINE WOELLERT

The Trump administration said Wednesday that it will use the Committee on Foreign Investment in the United States, a decades-old government panel, to control inbound investment from China, rather than take the more dramatic step of invoking emergency presidential powers to bar Chinese investment in certain high-tech sectors.

“For those who want to say ‘Is this us being weak on China?’ The answer is no,” Treasury Secretary Steven Mnuchin told reporters. “On the other hand, this is not intended to target China. The president felt very strongly we should be protecting technology, if there are issues, no matter who we’re dealing with.”

Congress is currently working on legislation to expand CFIUS’s ability to block deals that could transfer critical technology to China or other potentially hostile nations.

President Donald Trump, in a statement, said his administration looked forward to using that legislation, known as the Foreign Investment Risk Review Modernization Act, to ensure critical U.S. technology does not fall into the wrong hands.

“Therefore, upon enactment of FIRRMA legislation, I will direct my administration to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies identified in the Section 301 investigation,” Trump said, referring to a probe led by the Office of the U.S. Trade Representative that has prompted Trump to threaten tariffs on up to $450 billion worth of Chinese exports.

As part of that same investigation, Trump had said he intended to propose new restrictions on Chinese investment in the United States as well as “enhanced” rules governing which technologies could be exported to China by the end of this month.

Some of Trump's advisers have been urging him to take a strong stance by invoking his presidential emergency powers to bar Chinese investment in certain high-tech sectors. Trump said he would still consider executive action if Congress doesn't act.

“Should Congress fail to pass strong FIRMMA legislation that better protects the crown jewels of American technology and intellectual property from transfers and acquistions that threaten our national security - and future economic prosperity - I will direct my administration to deploy new tools, developed under existing authorities, that will do so globally, Trump said.

In addition, rather than announcing enhanced export controls on China, as hardliners in his administration have been urging, Trump said he has directed Commerce Secretary Wilbur Ross “to lead an examination of issues related to the transfer and export of critical technologies. Through this review, we will assess our nation’s export controls and make any modifications that may be needed to strengthen them to defend our national security and technological leadership.”

Trump’s decision was a victory for Mnuchin, who advocated a CFIUS-based approach to controlling Chinese investment in critical technology sector. But the Treasury secretary downplayed his disagreements with U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro, who had advocated the tougher approach.

He also dismissed the idea that the administration backpedaled after the stock market reacted negatively to press reports of a China-specific approach.

“I want to be very clear because I think people put labels on these things, and I think the labels are wrong. So, this not a question of whether it’s tougher or whether it’s weaker. This is not a question of whether the market reacted or the market didn’t react. We’ve gone through a very through process over a long period of time,” Mnuchin said.

“At the end of the day, the president’s advisers were 100 percent unanimous. When we sat down with the president yesterday for the final decision, everybody was very clear they were on board with this,” Mnuchin said.