Panel urges ban on US acquisitions by China state firms

November 17, 2016 08:35
A US congressional panel has recommended a ban on American acquisitions by Chinese state firms, a proposal that is bound to cause new frictions between Washington and Beijing. Photo: Bloomberg

A US congressional panel has recommended that Chinese state enterprises should be barred from acquiring companies in the United States.

In an annual report to Congress, the US-China Economic and Security Review Commission accused the Chinese Communist Party of using state-backed firms as an economic tool to advance and achieve national security objectives.

Lawmakers must take action and prohibit American acquisitions by the state entities, the panel said.

Action can be taken by changing the mandate of CFIUS, the US government body that conducts security reviews of proposed acquisitions by foreign firms, it said, according to Reuters.

"The Commission recommends Congress amend the statute authorizing the Committee on Foreign Investment in the United States (CFIUS) to bar Chinese state-owned enterprises from acquiring or otherwise gaining effective control of US companies," the panel was quoted as saying in its report.

The panel's report is purely advisory, but could carry extra weight this year following Donald Trump's victory in the US presidential election.

Trump strongly criticized China throughout the US election campaign, vowing to slap 45 percent tariffs on Chinese goods and label the country a currency manipulator.

Congress could also 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.

"Chinese state owned enterprises are arms of the Chinese state," Dennis Shea, chairman of the US-China Economic and Security Review Commission, was quoted as saying at a news conference.

"We don't want the US government purchasing companies in the United States, why would we want the Chinese Communist government purchasing companies in the United States?" 

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