US panel wants to ban China from snapping up American firms

As Donald Trump prepares to take charge in the White House, a US government panel has recommended a series of steps to the Congress stop cash-rich Chinese state-run firms from gobbling up American companies and posing a threat to America’s national security.

The US-China Economic and Security Review Commission wants the US to block Chinese state-owned companies from carrying out takeovers in the country.

Chinese companies are buying up foreign businesses at a record rate this year, fueling unease and objections in some Western countries.

Deals for technology companies have caused particular concerns. The US commission, which provides non-binding recommendations to the Congress, is accusing Beijing of using its huge state-owned enterprises (SOEs) as tools to advance national security goals. “There is an inherently high risk that whenever an SOE acquires or gains effective control of a US company, it will use the technology, intelligence, and market power it gains in the service of the Chinese state to the detriment of US national security,” the commission said in a report released on Wednesday.

Established by Congress to monitor US-China relations, the commission is known for taking a hawkish stance toward the Communist giant.

Its report was published as US President-elect Donald Trump, who has promised to get tough on China, is preparing to take charge in the White House.

On the campaign trail, Trump threatened to slap tariffs of 45 per cent on Chinese exports and label Beijing a “currency manipulator.” 

Chinese firms’ rapidly growing investment in the US is driven by a number of factors, including encouragement from the Chinese government, slowing growth at home and looser restrictions on overseas deals.

Western countries and companies often welcome the influx of Chinese money. But critics point out that China is much less open to foreign investment in many of its own industries.

Some recent attempts by Chinese state-backed companies to acquire US technology businesses raised concerns in Washington, CNN reported.

Earlier this year, Fairchild Semiconductor rebuffed a higher offer from Chinese state-backed buyers, and instead agreed to a deal with an American rival, over an “unacceptable level of risk for a failure to obtain [regulatory] approval,” according to a SEC filing.

State-owned Tsinghua Unigroup also dropped a USD 3.8 billion investment in tech firm Western Digital (WDC) in February after US regulators said they would investigate the deal on national security grounds, the report said.