Trump clamps down on Chinese investment in US tech firms

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Sharecast News | 25 Jun, 2018

Updated : 11:54

The US Treasury is drafting regulations that would block Chinese companies from buying US tech firms and stop US companies transferring important tech to China.

Initial regulations would look to stop organisations with at least 25% Chinese ownership from investing in American companies that involve “industrially significant technology”.

Following his Friday threat to impose tariffs on imported cars from Europe, the latest move in the mushrooming US-Chinese trade war, President Donald Trump said on Sunday that the government would limit Chinese access to US tech and will block additional technology exports to Beijing, the Wall Street Journal reported.

The National Security Council and the Commerce Department are planing "enhanced" export controls to avoid shipments of technology to China.

According to the WSJ, the White House's new plans would only affect new deals and not existing ones, but US-China joint ventures would not be able to make additional investments on certain US tech.

These initiatives are sure to slow and possibly prevent China from reaching its goal to become a global leader in 10 broad areas of technology by 2025.

Commerce Secretary Wilbur Ross told the newspaper: “The President has made clear his desire to protect American technology. All possibilities that would better protect American technology, including potential changes to export controls, are under review.”

These plans come after China and the EU decided to hit back at US tariffs against the states that elected Trump as president, just ahead of the US midterm elections.

It’s likely that the US will be hit hard if it continues to ramp up the tariffs. One Chinese state media outlet cited research by the Rhodium Group pointing to a 92% drop in Chinese investment in the US to $1.8bn in 2018, its lowest level in seven years.

Prior to the announcement from Washington, the People's Bank of China had cut the capital reserve requirements for domestic Chinese banks to the lowest level since 2010, as Beijing hopes to free up funding as the trade war looks set to slow down economic growth.

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