President Donald Trump, already embroiled in a trade battle with China, plans to ratchet commercial tensions higher by barring many Chinese companies from investing in U.S. technology firms, and by blocking additional technology exports to Beijing, said people familiar with administration plans.
The twin initiatives, set to be announced by the end of the week, are designed to prevent Beijing from moving ahead with plans outlined in its “Made in China 2025” report to become a global leader in 10 broad areas of technology, including information technology, aerospace, electric vehicles and biotechnology.
The Treasury Department is crafting rules that would block firms with at least 25% Chinese ownership from buying companies involved in what the White House calls “industrially significant technology.” The ceiling may end up lower than that, according to people familiar with discussions finalizing the plans.
In addition, the National Security Council and the Commerce Department are putting together plans for “enhanced” export controls, designed to keep such technologies from being shipped to China, said the people familiar with the proposals.
“We’ve got trillions of dollars seeking our crown jewels of technology,” said White House trade adviser Peter Navarro last week. “There has to be a defense against that.”
Before the rules go into effect, the individuals said, U.S. industry would have a chance to comment.
Industry groups, especially in the finance and technology industries, have been trying to track the progress of the proposal as it goes through various iterations in the administration.
They are mainly concerned that the export controls could negatively affect their businesses by preventing them from using their technological edge. While many object to the investment restrictions, they are seen as having less practical impact because Chinese investment has fallen off so drastically. Most of the industry lobbying has been focused on Congress, which is debating how to strengthen national-security reviews of foreign investment.
