Trump Restricts Chinese Investment in Key Sectors

President Donald Trump has signed a memorandum directing the Committee on Foreign Investment in the United States (CFIUS) to tighten restrictions on Chinese investment in strategic sectors, Nikkei Asia reports. This move aims to protect national security interests from perceived threats posed by China.

The memorandum, signed on Friday, asserts that China is "exploiting our capital and ingenuity to fund and modernize their military, intelligence, and security operations, posing direct threats to United States security," according to a White House official.

Under the new directive, the US will implement stricter rules to "curb the exploitation of its capital, technology, and knowledge by foreign adversaries such as China to ensure that only those investments that serve American interests are allowed," the official stated.

The Trump administration is also considering expanding restrictions on US outbound investment to China in sensitive technologies, including semiconductors, artificial intelligence, quantum computing, biotechnology, aerospace, and other critical areas.

China's Commerce Ministry responded to the announcement by calling on the US to stop "politicizing" and "weaponizing" economic issues. In a statement released on Saturday, the ministry vowed to closely monitor the situation and take necessary measures to defend China's legitimate rights and interests.

The move is expected to further escalate economic tensions between the two countries, following the president's imposition of increased tariffs on Chinese imports early in his presidency.

CFIUS has already overseen a significant decline in Chinese investment in the US. According to the Rhodium Group, annual Chinese investment has plummeted from $46 billion in 2016 to less than $5 billion in 2022.

The memorandum also highlights concerns regarding foreign ownership of US agricultural land. The official noted that foreign entities and individuals hold approximately 43 million acres of US farmland, representing nearly 2% of the nation's total landmass. China is estimated to own over 350,000 acres of farmland across 27 states.

Farm groups and lawmakers have expressed growing concerns in recent years about the impact of land purchases by foreign investors and countries, citing rising farmland prices and potential national security risks.

The White House official also cited repeated instances of Chinese hackers targeting US entities, including a recent breach of the Treasury Department's CFIUS office, the entity responsible for reviewing foreign investments for national security risks.

The outbound investment regime could potentially expand upon an executive order issued by the Biden administration in 2023, prohibiting some US investments in certain sensitive technologies in China and requiring government notification for other investments.