China accuses United States of taking protectionist stance on foreign investment

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China accuses United States of taking protectionist stance on foreign investment

China said on Thursday that protectionist sentiment is rising in the United States and criticised Washington for blocking a high-profile Chinese takeover of a US financial firm on security grounds.

Ant Financial’s planned US$1.2 billion purchase of transfer firm MoneyGram International Inc collapsed last week after a US government panel rejected the deal over national security concerns.

It was the most high-profile Chinese deal to be torpedoed since Donald Trump was elected US president a year ago on promises to put America first and protect US jobs from foreign competitors.

“We’ve noticed recently that protectionist voices have been rising in the US,” China’s commerce ministry spokesman Gao Feng said in a briefing.

China was particularly worried about countries using national security concerns as a way to block foreign investment, he said.

Ant Financial is owned by Chinese internet conglomerate Alibaba Group, which also owns the South China Morning Post.

In another blow to the global ambitions of Chinese firms, Huawei Technologies Co’s planned deal with US carrier AT&T Inc to sell its smartphones in the United States also fell apart because of security concerns, people with knowledge of the matter said on Wednesday.

Collapse of Huawei deal with AT&T ‘will threaten China-US trade ties’

The failed deals come as the US considers several new tariff moves in the coming weeks, including broad restrictions on steel and aluminium imports and punitive actions against China arising from an investigation into Beijing’s alleged theft of intellectual property.

“[Trade] remains foremost in my mind as a risk for China because it’s something they can’t control,” said Michael Spencer, chief Asia-Pacific economist for Deutsche Bank.

“But my base case is that we will see more trade friction this year than last, but that it’s not going to lead to a significant decline in real exports from China.”

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An editorial in the official China Daily on Thursday blamed the termination of the Huawei-AT&T deal on political pressure instead of business considerations, and said it threatened the kind of win-win deals China sought.

“This is not the first time US politicians have stooped to mudslinging to prevent the entry of Chinese hi-tech companies into the US market on the pretext they pose national security threats,” it said.

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Washington’s criticism of China’s tightly controlled economy and restrictions on foreign investment rang hollow, it said.

“Its blocking of deals involving Chinese companies in sectors where it has traditionally had an advantage shows its criticisms have more validity if directed at the US market,” the editorial said.

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