US panel urges ban on SOEs
Chinese corporate acquisitions ‘ shouldn’t be allowed’
US lawmakers should take action to ban China’s State- owned enterprises ( SOEs) from acquiring US companies, a Congressional panel charged with monitoring security and trade links between the US and China said on Wednesday ( US time).
In its annual report to Congress, the US- China Economic and Security Review Commission said the Communist Party of China has used Statebacked enterprises as the primary economic tool to advance and achieve national security objectives.
The report “has again revealed the commission’s stereotypes and prejudices,” Chinese Foreign Ministry spokesman Geng Shuang said in Beijing.
“We ask that Chinese companies investing abroad abide by local laws and regulations, and we hope that relevant countries will create a level playing field,” he told a news briefing.
The report recommended that Congress prohibit US acquisitions by such entities by changing the mandate of Committee on Foreign Investment in the United States ( CFIUS), the US government body that conducts security reviews of proposed acquisitions by foreign firms.
“The Commission recommends Congress amend the statute authorizing the CFIUS to bar Chinese SOEs from acquiring or otherwise gaining effective control of US companies,” the report said.
CFIUS, led by the US Treasury and with representatives from eight other agencies, including the departments of Defense, State and Homeland Security, now has veto power over acquisitions from foreign private and statecontrolled firms if it finds that a deal would threaten US national security or critical infrastructure.
If enacted, the panel’s recommendation would essentially create a blanket ban on US purchases by Chinese SOEs.
The panel’s report is purely advisory, but could carry extra weight this year because it comes as Presidentelect Donald Trump’s transition team is formulating its trade and foreign policy agenda and vetting candidates for key economic and security positions.
Congress also could be more receptive, after US voter sentiment against job losses to China and Mexico helped Republicans retain control of both the House and the Senate in last week’s election.
Trump strongly criticized China throughout the election campaign, grabbing headlines with his pledges to slap 45 percent tariffs on imported Chinese goods and label the country a currency manipulator on his first day in office.
The US and US businesses attracted a record $ 64.5 billion worth of deals involving buyers from the Chinese mainland this year, more than any other country targeted by Chinese buyers, according to Thomson Reuters data.
The CFIUS has shown a higher degree of activism against Chinese buyers this year, catching some by surprise. Prominent deals that fell victim to CFIUS include Tsinghua Holdings’ proposed $ 3.8 billion investment in Western Digital.