The US Treasury Department is making considerations of using emergency powers to curb tech investments by China. This comes at a time when President Donald Trump and his administration wants to punish the Chinese for what is termed as US property rights violations. The assistant secretary of the international affairs office Heath Tarbert has said that the American government is making the possible use of legislation that is commonly referred to as the International Emergency Economic Powers Act. The 1977 law gives President Donald Trump the powers to give a declaration of an emergency to respond to an extraordinary and unusual threat. In effect, the US government can seize assets and block transactions with China.
The US President is pushing his government to zero down on what he terms as unfair commerce practices by the Chinese government and its businessmen. In response to forced technology transfer and intellectual property theft, the President has threatened to impose tariffs to the tune of $150 billion to imports from China. The Chinese government has responded to the threat by proposing to impose a $50 billion tariff on American imports. Beijing has also promised to take further action if deemed necessary. President Trump has directed his Treasury Secretary Steven Mnuchin to make proposals and considerations of restricting investments by companies from China after a probe into Chinese illegal IP practices.
The Treasury Secretary has until May 21st to give way forward regarding executive action which will address the concerns that have been raised regarding investments in the United States. A presidential memo that was released on March 22 stated that the president would take executive action that is facilitated or directed by China in technologies or industries that are deemed necessary. Although investors are now concentrating on President Trump’s tariffs on Chinese goods, a slowdown in Chinese investment could further deepen as a result of new restrictions. If imposed, the tariffs will serve to hurt the ability of US firms to raise the relevant capital and hold down their valuations.
In the 2017 financial year, acquisition by Chinese companies in the United States fell from $53 billion the previous year to a mere $31.8 billion. This report was released by research compiled by Bloomberg early this year. Tarbert says that President Trump’s directive of restrictions in investments deals with Chinese companies operating in the United States. Officials in the treasury department are working to mark technology sectors in which Chinese firms will be banned from investing.
Dil Bole Oberoi
