Steven Mnuchin, U.S. Treasury secretary, right, speaks as Tony Sayegh, spokesman for the U.S. Treasury Department, listens during a news conference. (Photographer: Darryl Dyck/Bloomberg)

Mnuchin Said to Favor Less-Sweeping Investment Limits for China

(Bloomberg) -- The Treasury Department wants President Donald Trump to rely on legislation to tighten scrutiny of Chinese investments in the U.S. instead of an executive move imposing sweeping new limits, according to three people familiar with the matter.

Treasury Secretary Steven Mnuchin has until the end of June to present to the president his department’s final recommendations on Chinese investment curbs. Trump directed Mnuchin to draw up the restrictions as part of a probe into China’s alleged theft of intellectual property that also allows the imposition of tariffs.

Mnuchin and National Economic Council Director Larry Kudlow attended a meeting Tuesday between Trump and Republican lawmakers, including Senate Majority Whip John Cornyn and Senator Mike Crapo, chairman of the Senate Banking Committee.

At the gathering, Mnuchin and Kudlow planned to tout legislation drafted by Cornyn as an adequate way to clamp down on Chinese investment, according to the people, who requested anonymity to discuss internal discussions.

Mnuchin’s support of legislation restricting Chinese investments that imperil the U.S.’s national security is among his highest priorities, a Treasury spokesman said Tuesday. The White House press office didn’t immediately respond to a request for comment.

CFIUS Bill

Cornyn’s bill to overhaul the Committee on Foreign Investment in the U.S., which pre-dates Trump’s recent trade crackdown, would expand the scope of foreign investments that are reviewed for national-security concerns. The White House backed the bill earlier this year.

Bills to revamp CFIUS are being pushed through both chambers of Congress. The House proposal goes as far as to single out China among a proposed group of hostile nations whose companies could undergo extra scrutiny for national security risks if they seek to buy stakes in U.S. corporations.

But critics of Mnuchin’s approach say the new CFIUS legislation would be a weak substitute for the investment curbs the White House is considering in its trade dispute with China. As Treasury chief, Mnuchin is chair of CFIUS.

Mnuchin and Kudlow are often referred to as the “globalists” in the administration and they have clashed with U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro, who are more hawkish on China.

Trump late last month announced that tariffs on $50 billion worth of Chinese imports will be finalized by June 15 and investment restrictions are due by June 30, and that both measures will be implemented shortly after those deadlines. That announcement came after Mnuchin declared the trade war “on hold” and said tariffs would not be imposed for now.

Three rounds of trade talks between the world’s two largest economies to date have not yielded progress and Trump’s renewed tariff threat was seen as a non-starter for China.

©2018 Bloomberg L.P.

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