The group announced this on Monday, Fox Business reported on June 14.
“Over the past several months, we have engaged in constructive discussions with stakeholders to develop a robust, targeted outbound investment mechanism to ensure that the United States does not relinquish its manufacturing power in industries critical to our economic and national security. opponents,” the senators said in a statement quoted by the US media.
“The refined proposal released today has bipartisan, bipartisan support and addresses industry concerns,” she added.
The deal is just one part of a larger bill aimed at securing US computer chip supply lines. If signed into law, the US government could assess nearly half of all direct investment transactions from the US to China, according to an analysis.
The China policy comes as President Joe Biden considers ending US tariffs on China imposed under former President Donald Trump.
The deep recession in China’s real estate companies is becoming a major problem for both the country and the global economy.
The real estate market has been one of the few favored destinations for family savings. The developers and home buyers were also willing to take the loans from the banks, but these good days for China ended last year. Household debt was over $10 trillion. And about 27 percent of bank loans in China are linked to real estate, reported a think tank, Policy Research Group (POREG).
China’s housing market is now seen as “a national threat” as prices skyrocket, as do buildings, according to Think Tank quoting the New York Times.
Developers borrowed money in the form of onshore and offshore bonds, trust loans and asset management products, in addition to bank loans. So, lenders extend from institutions to the general people, both at home and abroad.
Interestingly, Beijing’s attack on real estate debt is part of the country’s struggle to bring corporate debt under control. Much of the company is owned by state-owned enterprises (SOEs). In SEOs, over-indebtedness is the root of the problem with one difference. For SOEs, the debt is laced with state guarantees and so there is no imminent threat of liquidation.
China has a debt to pay to the world market. It has benefited from the globalization of the market; his companies, though anchored behind the bamboo curtain, have spread to all corners of the globe with their unadulterated motto that money has no color. A crash in China could spill over into other countries and lead to deflation and unemployment, according to the Think Tank citing CNBC analysis.
The US Federal Reserve was also concerned about China’s failing economy that it could harm the global economy. “Stress in China’s real estate sector could put pressure on China’s financial system, with potential spillovers to the United States,” the Federal Reserve said in its recent financial stability report.