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Donald Trump to next target Chinese tech investments in US, say reports

Chinese investments in the US tech startups had totaled $2.3 billion in 2014, according to the economic research firm CB Insights

Press Trust of India  |  Washington 

Trade war: Trump sets 25% tariff on $50 bn Chinese goods, faces retaliation

is set to announce new measures this week to target growing Chinese investment in key technologies in the US, according to media reports, which could further escalate the trade war between the world's two largest economies.

The measures are part of the same broad US move to confront over its unfair trade practices as the tariffs on $50 billion of Chinese goods that the detailed earlier this month, the reports said.

China has vowed to strike back in equal measure against the tariffs, the first wave of which are due to take effect July 6.

Trump plans to ratchet commercial tensions higher by barring many Chinese companies from investing in firms, and by blocking additional to Beijing, reported, quoting people familiar with administration's plans.

The twin initiatives, set to be announced by the end of the week, are designed to prevent from moving ahead with plans outlined in its 'Made in China 2025' report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology, it said.

The Treasury Department is crafting rules that would block firms with at least 25 per cent Chinese ownership from buying companies involved in what the calls "industrially significant technology."

The ceiling may end up lower than that, according to people familiar with discussions finalising the plans, the report said.

The has said previously that details of the investment restrictions, as well as "enhanced export controls" limiting Chinese acquisition of US technology, will be announced by June 30.

The possible restrictions of Chinese investments in the US come at a time of rapidly declining Chinese investment in the US. It plunged more than 90 per cent in the first five months of 2018 compared with the same period a year earlier, quoted a report last week by Rhodium Group, a research firm that tracks Chinese foreign investment.

Rhodium linked the sharp drop to tougher scrutiny of Chinese acquisitions by US regulators and China's own restrictions on outbound investment.

 

Under the Trump administration, Chinese-backed deals have come under more aggressive scrutiny from the in the (CFIUS), an inter-agency panel chaired by the Treasury Department.

The committee vets certain deals that could give a foreign investor control of a US business for national security risks.

Chinese investments in the US had totaled $2.3 billion in 2014, according to the economic research firm Such investments zoomed to $9.9 billion in 2015 but witnessed a dip in 2016, the magazine reported last month.

But analysts say China's appetite to buy US firms and technology is still strong. In 2017, there were 165 Chinese-backed deals closed with American startups, only 12 per cent less than the 2015 peak, the report said.

Last week, the US Senate defied by voting to overrule his administration's deal with firm and reimpose a ban on hi-tech chip sales to the company.
 

The and have been at odds over the ZTE, which makes and is China's second largest manufacturer of

was on life support since said it had banned US companies from selling and to the Chinese firm for seven years.

US officials imposed the ban because of what they said were false statements by the firm over actions it claimed to have taken regarding the illegal sale of goods to and pleaded guilty to those charges in March last year and was hit with whopping fine of $1.2 billion.

Earlier this month the gave ZTE a lifeline by easing the sanctions in exchange for a further $1.4 billion penalty.

Several US lawmakers have criticised the Trump administration's deal to save ZTE. They were unhappy that the company, which they see as a national security issue, was being used as a in complicated trade negotiations with China.

First Published: Mon, June 25 2018. 18:42 IST
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