Mnuchin says US can block American joint ventures in China if there is technology transferred

  • Under new legislation, the U.S. will be able to block joint ventures of American companies overseas if critical technologies are involved, Treasury Secretary Steven Mnuchin says.
  • "That’s not just China. That’s anywhere," he says on CNBC's "Squawk Box."
  • The Commerce Department will oversee the joint venture aspect, Mnuchin said.

Treasury Secretary Steven Mnuchin said Wednesday that the U.S. can prevent a company from forming a joint venture overseas if the firm is dealing in critical technologies.

"One of the problems of CFIUS before was we could block an acquisition [in the U.S.], but then a company could go form a joint venture and we couldn't block that," Mnuchin said on CNBC's "Squawk Box." "If someone sets up a joint venture on critical technologies that would have been blocked, they will also be prohibited from transferring that technology through a joint venture."

"That is new and that's part of the legislation," he said. "Again that’s not just China. That’s anywhere."

The White House will rely on the newly strengthened Committee on Foreign Investment in the United States to deal with concerns about foreign purchases of sensitive domestic technologies, a senior administration official said Wednesday.

The changes will come through the Foreign Investment Risk Review Modernization Act, which passed the House by a wide margin. President Donald Trump in a statement Wednesday urged Congress to approve the legislation.

Wednesday's announcement contrasts with reports earlier in the week that the Trump administration was looking to block companies with 25 percent or more of Chinese ownership from buying certain U.S. tech-related companies.

The Commerce Department will oversee the joint venture aspect, Mnuchin said.

CFIUS has made it increasingly difficult for Chinese companies to invest in the U.S., citing national security concerns. Chinese acquisitions worth more than $2 billion in the first five months of this year have fallen apart, Rhodium Group's Thilo Hanemann said in a report last week.

Correction: This story has been updated to reflect the House passed the Foreign Investment Risk Review Modernization Act.