US-China Relations: Trump Administration To Restrict Chinese Investment In US Tech Companies

President Trump’s trade war with China may be alive and well. A new report over the weekend suggested the Trump administration will work to highly restrict, if not outright ban, Chinese companies from investing money in American tech companies.

After months of the U.S. and China levying tariffs against one another, the White House is looking into stopping companies with 25 percent or more in Chinese ownership from buying U.S. tech companies, the Wall Street Journal reported. While the specifics appear to still be in flux, the Journal noted that the Treasury Department’s initiative should be announced by the end of this week.

The ownership threshold could very well change by the time the new rules are announced, according to the report. That is not all, as there are reportedly plans in the works to block exports of the same kind of technology to China. Trump will apparently justify the new restrictions using the International Emergency Economic Powers Act (IEEPA) of 1977.

The IEEPA gives the president a broad level of power to take economic action in the event of national security threats. Trump’s justification for the past few months of economic disputes with China is that the Asian superpower allegedly steals American intellectual property.

Treasury Secretary Steven Mnuchin took to Twitter to blast the report as “fake news,” but did not explicitly deny that new restrictions are coming. Instead, Mnuchin claimed it will be “not specific to China, but to all countries that are trying to steal our technology.”

A crucial detail is that existing Chinese-American tech partnerships would be exempt from the rules, with the restrictions applying to new deals only. The White House’s anti-China actions came as a response to China’s “Made in China 2025” initiative, designed to make bring that country to the top of the tech food chain in the coming years.

China has apparently taken the hint and started downplaying the program, Reuters reported Monday. Whether the program itself will change or China will simply stop discussing it publicly is unclear.

Trump's move to block Chinese investments in American tech firms will crack down on a market that has already dwindled to basically nothing in the past two years. New data released last week suggested Chinese investment in U.S. companies was down 92 percent from 2017 to 2018.