The Trump administration is set to both widen and tighten scrutiny of foreign investment in the United States, aimed at curbing the acquisition of technology deemed sensitive to national security.
Treasury Secretary Steve Mnuchin downplayed the perception that the new measures were aimed mainly at China, telling CNBC he did not expect any significant economic effects. "This doesn't create more uncertainty," he said.
But a senior administration official, briefing journalists via teleconference, mentioned China. "The President has led on the issue of foreign competitors principally from China, who are aggressively acquiring sensitive US technology," the official said.
The new legislation, called the Foreign Investment Risk Review Modernisation Act (Firrma), would "provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security and future economic prosperity", President Donald Trump said in a statement. Upon final passage of the Act, he would direct his administration to "implement it promptly and enforce it rigorously, with a view towards addressing the concerns regarding state-directed investment in critical technologies".
On Tuesday, the House of Representatives passed Firrma, which approves a bipartisan overhaul of the Committee on Foreign Investment in the United States (CFIUS), the main agency reviewing investment proposals. The Senate has already passed a version of Firrma; the two versions will now be reconciled in a final step before the Act becomes law.
If Congress fails to pass the Act quickly, Mr Trump said he would use his executive authority to order new restrictions that could be applied globally.
He added: "To further ensure a robust defence of American technology and intellectual property, I have also directed the Secretary of Commerce to lead an examination of issues related to the transfer and export of critical technologies.
"Through this review, we will assess our nation's export controls and make any modifications that may be needed to strengthen them to defend our national security and technological leadership."
The senior administration official described CFIUS as an extremely powerful tool to protect US national security interests at risk from "strategically motivated foreign investment".
"After CFIUS' review, the President can block transactions found to pose a threat to the national security of the United States. A strong CFIUS enhanced by Firrma will deter foreign investment that risks exposing sensitive US technology," he said.