US calls for tighter controls on Chinese investment
Source: Agencies |
November 15, 2012, Thursday
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Print Edition
Print Edition
THE US Congress is being urged to tighten screening of investment by Chinese state-owned companies in the United States, with an advisory panel saying they present "unfair competition" to American firms.
That's the primary recommendation of an annual report by the US-China Economic and Security Review Commission. The panel advises Congress on the national security implications of the relationship between the world's two largest economies.
It is proposing that Congress broaden the mandate of a committee chaired by Treasury Secretary Timothy Geithner that screens foreign investment proposals.
China already accuses the US of discriminating against its companies. Its investment in the US is still comparatively low but has risen sharply in recent years and is set to hit record levels this year.
The commission said: "Growing Chinese investment may offer an important new source for US job creation and economic growth, but it is too early to know whether the benefits will outweigh whatever longer-term economic costs Chinese state-owned and state-directed investments may bring."
Its report said that despite three decades of economic reform in China, state-controlled enterprises still accounted for as much as half of the Chinese economy, and their role had been enhanced by a US$585 billion government stimulus program during the 2008 slowdown.
The enterprises benefit from preferential financing from China's state-dominated banks, cheap land, fuel and electricity, regulatory exemptions and tax preferences, the commission claimed.
The commission proposed that Congress examine Chinese investment and assess whether to widen the mandate of the Committee on Foreign Investment in the United States so it would be required to screen transactions by Chinese state-owned companies that give them a majority stake in American companies.
Currently the committee screens investment proposals only on national security grounds.
The commission also proposes prohibiting investment in a US industry by a foreign company whose government prohibits foreign investment in that same industry.
That's a response to what it described as the exclusion of American firms from investing in sectors dominated by state-controlled firms in China, such as telecommunication services and oil and natural gas.
It also recommended that Congress conduct an in-depth assessment into Chinese "cyber espionage" practices.
China is also advancing its military modernization efforts, with the development of advanced fighter jets, and space and ballistic missile programs, the report said.
It also noted "significant improvements" in China's nuclear forces and said that within two years it would perhaps have attained three ways of delivering such weapons - by bombs, land-based missiles and submarine-launched ballistic missiles.
That's the primary recommendation of an annual report by the US-China Economic and Security Review Commission. The panel advises Congress on the national security implications of the relationship between the world's two largest economies.
It is proposing that Congress broaden the mandate of a committee chaired by Treasury Secretary Timothy Geithner that screens foreign investment proposals.
China already accuses the US of discriminating against its companies. Its investment in the US is still comparatively low but has risen sharply in recent years and is set to hit record levels this year.
The commission said: "Growing Chinese investment may offer an important new source for US job creation and economic growth, but it is too early to know whether the benefits will outweigh whatever longer-term economic costs Chinese state-owned and state-directed investments may bring."
Its report said that despite three decades of economic reform in China, state-controlled enterprises still accounted for as much as half of the Chinese economy, and their role had been enhanced by a US$585 billion government stimulus program during the 2008 slowdown.
The enterprises benefit from preferential financing from China's state-dominated banks, cheap land, fuel and electricity, regulatory exemptions and tax preferences, the commission claimed.
The commission proposed that Congress examine Chinese investment and assess whether to widen the mandate of the Committee on Foreign Investment in the United States so it would be required to screen transactions by Chinese state-owned companies that give them a majority stake in American companies.
Currently the committee screens investment proposals only on national security grounds.
The commission also proposes prohibiting investment in a US industry by a foreign company whose government prohibits foreign investment in that same industry.
That's a response to what it described as the exclusion of American firms from investing in sectors dominated by state-controlled firms in China, such as telecommunication services and oil and natural gas.
It also recommended that Congress conduct an in-depth assessment into Chinese "cyber espionage" practices.
China is also advancing its military modernization efforts, with the development of advanced fighter jets, and space and ballistic missile programs, the report said.
It also noted "significant improvements" in China's nuclear forces and said that within two years it would perhaps have attained three ways of delivering such weapons - by bombs, land-based missiles and submarine-launched ballistic missiles.
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