Only five takeovers of American firms have been blocked by USA presidents on national security grounds since 1990. On Tuesday, the US House of Representatives passed their version of the bill, which will need to be reconciled with the Senate version.
Trump added that upon final passage of the legislation, the Foreign Investment Risk Review Modernization Act, he will direct his administration "to implement it promptly and enforce it rigorously, with a view toward addressing the concerns regarding state-directed investment in critical technologies".
The investment restrictions are part of the administration's efforts to pressure Beijing into making major changes to its trade, technology transfer and industrial subsidy policies after United States complaints that China has unfairly acquired American intellectual property through joint venture requirements, unfair licensing and strategic acquisitions of U.S. tech firms.
The White House will push Congress to strengthen an inter-agency panel that it will employ as its main tool to curb Chinese investments in sensitive US technologies, according to senior Trump administration officials.
The CFIUS legislation passed in the House would expand investigations by CFIUS to include minority investments in "critical technology" or "critical infrastructure" and joint ventures where technology companies contribute intellectual property, according to a copy of the proposal seen by Bloomberg.
The debate inside the administration on how to deal with China had reportedly become intense between hardliners urging for a tough approach with China and moderates led by Mnuchin who argued for a less confrontational approach. The president can direct CFIUS to heighten scrutiny on sensitive technologies.
Kudlow denied reports that he's interviewing a replacement for himself. It's also a win for proponents of conciliatory tone in negotiations with China such as Treasury Secretary Steven Mnuchin, who told reporters on Wednesday that moves to strengthen CFIUS aren't meant to single out Beijing.More news: Have the Celtics made another offer for Kawhi Leonard?
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The administration will still impose $34 billion in tariffs on Chinese goods effective July 6, and China has pledged to retaliate.
"The market is clearly viewing this as an upside surprise, as the White House intended".
USA stock index futures pulled back from sharp losses earlier, after the Trump administration softened its stance.
The Australian dollar also tumbled (-0.7pc) to 73.4 United States cents, its lowest value in at least 13 months.
FIRRMA would require more companies that invest in, or form joint ventures with, certain United States businesses, not only to submit to a review by CFIUS, but to pay the agency at least US$300,000 for the work. "What they don't steal from us they buy away from us".
In its current form, CFIUS had already become more active in blocking proposed U.S. investments by Chinese companies over the past year.
Ant Financial is an affiliate of Alibaba Group, which owns the South China Morning Post.