Trump Declines $1.3 Billion U.S. Tech Company Deal with China for Security Reasons
President Donald Trump refuses one of the biggest acquisitions of a U.S. company by a Chinese corporation. Despite the exit of White House chief strategist Steve Bannon who favored “economic nationalism,” Trump pressed forward with a stringent policy against China, citing national security concerns.
The U.S. president issued an executive order through the Defense Production Act of 1950 denying the Chinese-backed private equity firm China Venture Capital Fund Corp Ltd. (CVCF) from acquiring US-based chipmaker Lattice Semiconductor Corporation.
CVCF is a Chinese corporation that manages industrial investments and venture capital.
An official written statement was also released by Treasury Secretary Steve Mnuchin, outlining the reason for Trump’s refusal of the massive $1.3 billion deal.
“Consistent with the administration’s commitment to take all actions necessary to ensure the protection of US national security, the president issued an order interdicting the acquisition,” Mnuchin confirmed, according to the Oregonian.
President Trump took to Twitter to say that China holds a business tax rate of 15% and that the U.S should do everything in their power to match them and win with the economy, jobs and wages included.
Another statement was released by White House Press Secretary Sarah Huckabee Sanders referencing China’s stake in the deal. Sanders noted that the “national-security risk posed by the transaction relates to, among other things, the potential transfer of intellectual property to the foreign acquirer.”
At the Conservative Political Action Conference in Washington earlier this year, Bannon stated that the antithesis of globalism was economic nationalism. He described it as a governing creed that pushes the economic interests of the wealthy international elite above those of average working-class Americans.
China’s natural interest in Silicon Valley has risen in recent years; however, they have been pushed back by the U.S. government with regards to investments in the technology sector. Reuters reported that Beijing’s has increasingly shown interest in matters such as artificial intelligence and machine learning, among other technologies.
Due to China’s interest in Silicon Valley investments, the United States of America has taken the necessary steps to strengthen the role of the Committee on Foreign Investment in the United States (CFIUS), an interagency committee responsible for reviewing foreign acquisitions of companies in the U.S. on national security grounds.