WASHINGTON (Reuters) -A bipartisan group of U.S. lawmakers said on Monday they had agreed on a proposal to give the government sweeping new powers to block billions in U.S. investment into China, though the measure is part of a broader bill with an uncertain future.
News of the provision, part of legislation that aims to boost U.S. competitiveness and grant chipmakers $52 billion to expand U.S. operations, drew opposition from China, which said it would only deprive the United States of opportunities.
"The refined proposal released today has bipartisan, bicameral support and addresses industry concerns," U.S. Senators Bob Casey and John Cornyn, and Representatives Rosa DeLauro, Bill Pascrell, Jr., Michael McCaul, Brian Fitzpatrick and Victoria Spartz, said in a statement.
The measure also covered the scope of prospective activities, industries affected, and the prevention of duplicative authorities, they added.
The initial "outbound investment" proposal encountered opposition for fear it could reduce companies' investments abroad, leading some chipmakers to oppose its inclusion in the chips bill being hammered out by Senate and House lawmakers.
Democratic Senator Mark Warner told Reuters on Monday the "the clock is ticking" on the broader chips bill.
There were "a lot of conversations", he added, about pivoting to a bill that would only focus on subsidies for plants to make chips, potentially dropping trade and other measures aimed at helping the U.S. compete with China in science, business and technology.
The outbound investment measure, originally proposed as a standalone bill by Cornyn and Casey, was later added to the House version of a massive bill that includes the grants for chipmakers and is aimed at countering China's rise.
Asked on Tuesday to comment on the proposal, foreign ministry spokesman Wang Wenbin said China opposed how the U.S. "over-generalised" the concept of national security and carried out investment reviews it considered "unreasonable'.
"The restrictions that U.S. politicians continue to impose on normal economic and trade co-operation between China and the United States will not hamper China’s development, but will only lead them to box themselves in and miss out on development opportunities," he told a news conference.
The draft legislation, which would capture fewer investments than the original version, stirred opposition from critics who said it would harm American competitiveness.
The US-China Business Council said, "If such government controls were implemented on a unilateral basis, it would only hurt the flexibility and resilience of American companies."
The draft says a new investment committee would engage with allies to coordinate and share information.
The legislation aims to give the U.S. government greater visibility into U.S. investments.
It will be mandatory to notify the government of investments that may fall under the new regulations, and the U.S. can use existing authorities to stop investments, or mitigate risk. If no action is taken, the investment can move forward.
The concept behind the measure has support within the administration of U.S. President Joe Biden.
In July, national security adviser Jake Sullivan said the government was working on new investment screening and considering outbound investment as it seeks to better position the United States for competition in technology.
A study by Rhodium said 43% of U.S. foreign direct investment transactions in China over the past two decades could have been subject to screening under the broad categories set out by the original proposal.