Markets surge after Trump backs off new restrictions on foreign investments

Gladys Abbott
June 28, 2018

Instead, the White House wants Congress to pass legislation to bolster the Committee on Foreign Investment in the US, or CFIUS, so it can prevent Chinese companies from violating intellectual-property rights of American companies, two administration officials said, speaking to reporters Wednesday on the condition of anonymity.

The White House signaled in May that it would adopt restrictions on Chinese investment in "industrially significant technology". The House passed a bill expanding CFIUS' authority this week.

"This isn't a question about being weak or strong, this is about protecting technology".

The Treasury Department has recommended that Trump use the Committee on Foreign Investment in the United States (CFIUS), whose authority would be enhanced by new legislation in Congress, to control investment deals. The U.S.is planning to impose tariffs on $34 billion in Chinese goods on July 6, an amount that could reach $450 billion if China refuses to back down and retaliates with sanctions of its own.

"It seems like this move is being undertaken with the goal of coming to a resolution ultimately on the trade policy issues the US has with China", said Stephen Ezell, who manages global innovation policy at the Information Technology and Innovation Foundation think tank.

White House economic adviser Larry Kudlow told reporters the administration remains in communication with its Chinese counterparts. "What they don't steal from us they buy away from us". "The ball is in their court". "But we are not going to, on a wholesale basis, discriminate against China as part of a negotiation". "I'm always the optimist, but I have to be realistic".

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The statement follows Trump's June 8 announcement that he would provide more details by June 30 on a plan for restricting Chinese investments in the US.

Stock markets surged Wednesday following President TrumpDonald John TrumpCrowley stunner tops huge night for left Trump congratulates Romney on primary win Judge orders Trump admin to begin reuniting immigrant families MORE's decision not to impose new executive restrictions on foreign investments. After news of the White House decision broke early Wednesday, stock futures rallied.

Therefore, upon enactment of FIRRMA legislation, I will direct my Administration to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies identified in the Section 301 investigation.

Trump also said that he has directed Commerce Secretary Wilbur Ross to examine United States export controls and recommend modifications that may be needed "to defend our national security and technological leadership". He said the interagency investment committee, known as CFIUS, provided a lot of ways to protect technology.

"At the end of the day, all the president's advisers were 100 per cent unanimous when we sat down with the president", Mnuchin said.

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