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By Steve Holland
WASHINGTON (Reuters) -President Donald Trump signed a memorandum on Friday that directs the Committee on Foreign Investment in the United States to restrict Chinese investments in strategic areas, a White House official said.
The national security memorandum is aimed at promoting foreign investment while protecting U.S. national security interests from threats posed by foreign adversaries like China, the official said.
The order says that China is "exploiting our capital and ingenuity to fund and modernize their military, intelligence, and security operations, posing direct threats to United States security," the official said.
Under the directive, the United States will establish new rules "to curb the exploitation of its capital, technology, and knowledge by foreign adversaries such as China to ensure that only those investments that serve American interests are allowed," the official said.
The official also said the Trump administration will consider new or expanded restrictions on U.S. outbound investment to China in sensitive technologies, including semiconductors, artificial intelligence, quantum, biotechnology, aerospace and more.
The United States should stop "politicizing" and "weaponizing" economic issues, the Chinese commerce ministry said in a statement on Saturday, adding that China would closely monitor the situation and take necessary measures to defend its legitimate rights and interests.
The steps threaten to heighten economic tensions with China after the president increased tariffs on Chinese imports as one of his first moves in office.
CFIUS, which scrutinizes foreign investment in the United States for national security risks, has already overseen a sharp decrease in Chinese investment in the United States.
According to the Rhodium Group, annual Chinese investment has dropped from $46 billion in 2016 to less than $5 billion in 2022.
The order noted that foreign entities and individuals hold roughly 43 million acres of U.S. agricultural land, which is nearly 2% of all land in the United States, the official said.
China owns more than 350,000 acres of farmland across 27 states, the official said.
Farm groups and lawmakers have expressed concerns in recent years that land buys by investors and foreign countries are driving up farmland prices and threatening national security.
The White House official also noted that Chinese hackers have repeatedly targeted U.S. entities, including recently breaching the Treasury Department’s CFIUS office, the entity responsible for reviewing foreign investments for national security risks.
The outbound regime could expand on an executive order, unveiled in 2023 by the Biden administration, to start prohibiting some U.S. investments in certain sensitive technologies in China, and requiring government notification of other investments.
(Reporting By Steve Holland; additional reporting by Nandita Bose, Trevor Hunnicutt and Alexandra Alper and Ryan Woo in Beijing; Editing by Franklin Paul and Alistair Bell)
