Congress Eyeing More Chinese Foreign Investment Restrictions, Congressman Says

Amid rising U.S.-China technology competition, Congress will continue to push for increased restrictions on inbound Chinese investment, said Rep. Darin LaHood, R-Ill. LaHood also said the Trump administration -- which has experienced success using tariffs and export controls to gain ground in trade negotiations -- will likely continue to leverage those measures, particularly against China.

“To have a trade deal with Japan, a trade deal with China, and the [U.S.-Mexico-Canada Agreement], I think that emboldened the administration in terms of their policies or their strategies having worked,” LaHood said during a June 17 webinar hosted by Pillsbury Winthrop. “I think you'll most likely see more of that moving forward.”

LaHood, who is co-chair of the House’s U.S.-China Working Group and a member of the Republican China Task Force, said there is significant bipartisan support for increased investment restrictions. He said members of the Republican China Task Force are pleased with the increased jurisdiction given to the Committee on Foreign Investment in the U.S. (see 2005200032) and are looking to continue to bolster CFIUS. “I think you're going to continue to see legislative measures and other measures that will be skeptical and dubious of Chinese investment in the United States,” LaHood said.

He also said, however, that the administration must strike a balance between holding China accountable for trade-related issues and sustaining the phase one trade deal. Although LaHood said he expects sanctions and export controls to be “options in the toolbox,” he said “it’s hard to tell” how the administration may use them. “A lot of that is dictated by the administration and what direction they want to go,” he said.

LaHood said 25% of the soybeans that grow in his Illinois district are exported to China, and said it would be a “mistake” if President Donald Trump followed through on his threat to terminate the phase one deal (see 2005040012). But he also said there is a lot of “anger” within Congress toward China. “I think that's what you’re seeing with all of these pieces of legislation introduced and the rhetoric on China,” he said. “But we have to be very careful because that phase one deal is important for the economy. It's important for our industries in the U.S.”