Republicans split over Joe Biden’s plan to restrict US investment in Chinese firms
US Congressional Republicans disagreed over the best way to crack down on China when the chairman of the House Financial Committee described President Joe Biden’s plan to restrict outbound investment in Chinese tech businesses as “nonsense” and urged to use “time-tested tools to get tough on China – not novel concepts”.
“If you oppose Beijing’s state-owned enterprises, you want more Western investment in China, not less,” Representative Patrick McHenry, a Republican from North Carolina, said on Wednesday at an oversight hearing of the Committee on Foreign Investment in the United States.
CFIUS, a federal inter-agency body chaired by the US Treasury Department, is charged with assessing national security risks involving foreign investments.
Emphasising that more, “not fewer”, Americans must be in control of Chinese technology companies, McHenry added that “this is precisely why Xi Jinping has been attacking Western influence in Chinese companies”.
“The Biden administration’s outbound investment proposal will only help him achieve that goal more quickly,” he said, asking the Treasury Department to “avoid a disaster in its implementation”.
Last month, Biden issued an executive order prohibiting certain outbound investments to China in several technology sectors that can pose a national security threat to the US.
The Treasury Department is responsible for implementing the programme. It is currently seeking public comments for “additional clarity and transparency” in its formulation.
The regulation followed warnings from several federal officials and some Republican lawmakers that Americans were aiding Beijing by putting money into Chinese tech firms that later handed over the technology to the Chinese military.
Contrary to McHenry’s view, some top Republicans have criticised Biden’s executive order as “falling short” in tackling the China threat.
Representative Mike Gallagher, a Republican from Wisconsin and chairman of the House Select Committee on the Chinese Communist Party, reacted to the order in August by calling for similar restrictions on public market investments in Chinese firms with military ties.
“The CCP is an adversary and you don’t defeat an adversary or deter an adversary by shovelling billions of dollars into their military and technology programme,” he said.
But on Wednesday, McHenry warned that to “outcompete China we cannot become more like the Chinese Communist Party”.
“We must double down on our commitment to free people and free markets”.