U.S. To Slam Restrictions On Chinese Investments As Trade Dispute Escalates

28 June, 2018, 05:02 | Author: Barbara Daniel
  • China and Europe warn trade war could trigger global recession

Jyrki Katainen, the EU's vice president on jobs and economic growth, added that actions like Trump's unilateral tariff hikes against China showed that WTO rules on global trade had to change, the Associated Press reported.

But contradictory statements Monday from senior USA officials have muddied the waters on what path the White House will take.

"Markets start the week on a risk-off tone after President Trump threatened to impose tariffs on imported cars from Europe - and he is now planning to curb Chinese investments in "sensitive" USA industries", said analyst Konstantinos Anthis at traders ADS Securities.

Meanwhile, later this week, the Treasury Department is due to unveil a proposal on investment and export restrictions.

U.S. stocks tumbled in the last session following weekend news that U.S. President Donald Trump intends to block some Chinese companies from investing in U.S. technology.

Rhodium linked the sharp drop to tougher scrutiny of Chinese acquisitions by United States regulators and China's own restrictions on outbound investment. "The leaker either doesn't exist or know the subject very well" and that any restrictions would not be aimed exclusively at China but at "all countries that are trying to steal our technology".

China often says the United States' acknowledgement of its "one-China" policy is foundational for two-way ties, and that Taiwan is the most sensitive issue in the relationship. As China steps up its engagement in Europe, the European Union, too, is working on measures to tighten screening of outside investments to protect critical technologies and infrastructure.

US Secretary of Defence James Mattis will make his first visit to China this week amid rising tensions between the two countries but also a deep need for Beijing's support in nuclear talks with North Korea.

The S&P 500 Index closed down 1.35%, which says many USA investors believe the worst case scenario won't happen with a trade war and I hope they're right but we're gambling with the former casino owner called Donald Trump. "It's something you could only dream about". At the close, the Dow was down 328 points, or 1.3%, while the Nasdaq dropped 2.1%.

U.S. Defense Secretary Jim Mattis arrives at a hotel in Beijing, China, Tuesday, June 26, 2018. Congress, in parallel, is working on legislation to reform the Committee on Foreign Investment in the United States, which would scrutinize inbound investment in the USA on national security grounds.

Even the hint of a possible CFIUS review can kill a potential investment. Congress also is looking at ways to tighten the investment review process.

Chinese investment in the United States already declined by 92 percent to $1.8 billion in the first five months of this year - its lowest level in seven years.

Eurasia Group's Triolo cited China's huge domestic market, a number of great Chinese tech companies, and its education system - which is pumping out three times more industrial technology graduates than the U.S. - as reasons for China eventually rivaling the US.

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