Trump Directs CFIUS to Restrict Chinese Investments in US

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(Bloomberg) — President Donald Trump is directing the Committee on Foreign Investment in the United States to restrict Chinese spending on technology, energy and other strategic US sectors, his administration’s latest salvo against the world’s second-largest economy.

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Trump laid out the plan in a national security presidential memorandum signed Friday that commits to using “all necessary legal instruments” to bar Chinese affiliates from investing in US technology, critical infrastructure, health care, agriculture, energy, raw materials and other industries. 

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Trump’s directive sets the stage for a more muscular use of CFIUS, a secretive panel that scrutinizes proposals by foreign entities to buy US companies or property, to thwart Chinese investment.

The People’s Republic of China “does not allow United States companies to take over their critical infrastructure, and the United States should not allow the PRC to take over United States critical infrastructure,” Trump wrote in the memo. “PRC-affiliated investors are targeting the crown jewels of United States technology, food supplies, farm land, minerals, natural resources, ports and shipping terminals.”

The president has also committed to establish new rules meant to curb the exploitation of capital, technology and knowledge by foreign adversaries such as China. At the same time, according to the memo, the administration will consider new or expanded restrictions on outbound investment to Beijing in sectors including semiconductors, artificial intelligence, quantum technology, biotechnology and aerospace.

The administration will also seek to protect US investors by auditing foreign companies on US exchanges and ensuring foreign adversary companies are ineligible for pension plan contributions, Trump added in the memo. 

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For years, China hawks in Washington have urged stronger CFIUS reviews to restrict investment in US land and sensitive sectors, saying it threatens to undermine national security and American industrial manufacturing capacity.

“The Chinese Communist Party is exploiting US capital to modernize its military, expand its authoritarian influence, fund its Orwellian surveillance state and prop up its forced labor regime — all while undermining America’s industrial strength,” said Nick Iacovella, executive vice president of the Coalition for a Prosperous America. “President Trump’s executive order sends a clear message: The days of allowing China to weaponize US investment and financial markets against us are over.”

According to the memo, the US will strengthen CFIUS authority over greenfield investments and “restrict foreign adversary access to US talent and operations in sensitive technologies.” The US also will protect farm land and real estate near sensitive facilities, Trump’s memo says. 

The move responds to growing concern that foreign investment in US farm land poses a threat to food supply chains and nearby military installations. The US last year ordered a Chinese crypto mining company to leave property it purchased near a Wyoming Air Force base with intercontinental ballistic missiles, following a CFIUS review. 

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Lawmakers on Capitol Hill have advanced legislation to bolster CFIUS reviews, expand the panel’s authority, and bar Chinese-linked businesses from buying tracts near military sites.

It was not immediately clear how all of Trump’s plans would be implemented and if he would need to seek additional authority from Congress for some of the changes. 

While the president’s action Friday singles out China, he is also trying to spur investment from allied trading partners through a new “fast-track” process to facilitate projects. The US also also will expedite environmental reviews for any investment over $1 billion, Trump said in his memo. 

The president promised those speedier reviews before his election. 

The move comes as Trump has embarked on a second-term agenda aimed at reshaping the US economy. Trump has already leveled China with 10% tariffs on its imports and has moved to impose sweeping levies on allies and rivals alike, with plans for 25% tariffs on steel and aluminum as well as reciprocal tariffs on countries with their own levies.

(Updates throughout with details from the memo.)

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