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Defense Bill Includes Reforms on Foreign Investment in the U.S.

President Trump has signed a defense bill which also allows tougher rules on foreign investments in the name of national security, coming at a time of rising trade tensions between the U.S. and China.

In an interview with CGTN America, IPI’s Dr. Merrill Matthews discussed the defense bill, saying, “There’s a lot of interest and concern raised in this legislation. It specifically targets China, which is mentioned 56 times, and the word ‘Chinese’ is cited another 20 times or so.”

Explaining further, Matthews said the defense bill sees a balance-of-power challenge coming from China. “It wants to try to address that before it gets out of hand. The U.S. has become very concerned about the ‘Made in China 2025’ initiative and the ‘Belt and Road’ initiative. The bill specifically requires an examination and report to be released in two years on how those initiatives are going.”

When asked if U.S. companies investing in China will be under more scrutiny, Matthews stated that while the U.S. business community, which has criticized China’s disregard for tech transfer policy and IP, may support the legislation, the law will nonetheless impact investment. “It raises the hurdles,” he said, “and I think you’re going to see a significant decline in investment.”

“It’s certainly going to affect the investment in tech start-ups,” said Matthews.

Matthews added that not all the U.S. business community’s concerns dovetail with the president’s. “Interestingly, this administration sees an awful lot of things as national security concerns. Things like just even buying foreign cars. [The administration is] raising a threat it may put some tariffs on those. Nobody thinks buying a Hyundai or BMW is a national security threat but the president is threatening to use that initiative.”

Click here to watch the full interview. 

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