The potential investment restrictions were part of the White House’s effort to punish China for what it says are years of unfair trade practices, including cyber espionage and a pattern of pressuring American technology companies to hand over valuable trade secrets.
Among the actions that the United States has targeted are what it describes as the “theft” of corporate secrets and China’s strategy to dominate cutting-edge industries, known as Made in China 2025. Data released this week from Public Citizen, a liberal advocacy group and think tank, showed that 56 percent of Chinese investments in the United States last year were in industries that Beijing defines as “strategic,” such as aviation, biotechnology and new-energy vehicles — up from 25 percent in 2016.
In a meeting last week with China’s president, Xi Jinping, American corporate executives urged him to send one of his most trusted advisers, Wang Qishan, to the United States for talks. But with the United States and China so far from a compromise, such a visit appears unlikely in the near term, people familiar with the deliberations said.
On Wednesday, Larry Kudlow, the White House’s chief economic adviser, said that Mr. Trump and Mr. Xi “work well together,” but that the president was unsatisfied with the Chinese response on trade talks.
“The ball is in their court,” Mr. Kudlow said.
Administration officials who outlined the decision in an early-morning briefing said that Mr. Trump had been pleased with the evolution of the legislation to expand Cfius and that he viewed it as an “extremely powerful tool” to safeguard national security. The overhaul would allow Cfius to review investments from a list of “countries of special concern” but stops short of specifically naming China as the target.
The Senate and House have passed different versions of the legislation, which must be reconciled and sent back for a final vote. While final approval appears likely in the coming weeks, it is not guaranteed. Mr. Trump said he would be prepared to “deploy new tools, developed under existing authorities,” if lawmakers did not act to “protect the crown jewels of American technology and intellectual property from transfers and acquisitions that threaten our national security — and future economic prosperity.”
The decision could help repair ties with Republican lawmakers, who have been at odds with Mr. Trump over his approach to trade, including his tariffs on the European Union, Canada and Mexico and his decision to rescue the Chinese telecommunications company ZTE.