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US panel urges tougher scrutiny of China investment

Published on Nov 14, 2012 2:12 PM

WASHINGTON (REUTERS) - The United States Congress should consider tougher screening laws for investments made by China's huge state-owned enterprises (SOEs) because of what is believed to be the threat they pose to US companies, an advisory committee said in its annual report on Wednesday.

The US-China Economic and Security Review Commission, which typically takes a tough view of relations with China, said Beijing lavishes special favours on its state-owned companies that could give them an unfair advantage even if they build facilities in the United States.

"Once invested in the United States, Chinese SOEs may continue to benefit from Chinese government subsidies that would allow the Chinese to sell their products at less than the cost of production. Once their U.S. competitors are driven out of business, Chinese SOEs might dominate the market and even raise prices," the panel said in the report.

The commission's 32 recommendations also called on Congress to carry out an in-depth assessment of Chinese cyber-spying and to weigh tougher penalties on companies found to cash in on industrial espionage.

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