August 19, 2010 / 5:10 PM / 9 years ago

U.S. lawmakers cheer as China steel firm backs out

WASHINGTON (Reuters) - Lawmakers from U.S. steel-producing states on Thursday cheered a decision by Chinese steel company Anshan Iron & Steel Group to back off plans to invest in a U.S. steel plant.

“Not only would this venture have set a dangerous precedent further undermining our domestic steel market, but it posed serious national security concerns,” Representative Tim Murphy, a Pennsylvania Republican, said in a statement.

Anshan’s decision comes at a time when China has pushed past Japan to become the world’s second largest economy and high U.S. unemployment and a huge budget deficit are causing political anxiety in the United States.

Murphy and Representative Pete Visclosky, an Indiana Democrat, led a group of 50 U.S. lawmakers who had urged the Obama administration’s Committee on Foreign Investment in the United States to investigate the proposed investment.

The lawmakers said they did not know whether CFIUS had any role in the Chinese company’s decision.

But “it is our hope that CFIUS remains vigilant in ensuring that all investments in the United States are fully vetted for the purpose of protecting American national security and American jobs,” Visclosky said.

Chen Ming, vice-chairman of Angang Steel Co Ltd, told reporters earlier on Thursday in Hong Kong that the company’s parent, Anshan Iron & Steel, had decided to put its investment plan on hold because of the U.S. lawmakers’ opposition.

“This is all because of the United States and we believe the chance for the project to be approved was small,” Chen said at a news conference on Angang’s quarterly results.

Anshan Iron & Steel said in May that it had agreed to take a 14 percent stake in a $175 million facility being built in Amory, Mississippi, by Steel Development Co, a U.S. start-up.

Chen said Anshan Iron & Steel had not actually put any money in the project yet, so would not incur any loss.

DIFFERENT VIEWS ON FOREIGN INVESTMENT

Natalie Wyeth, a spokeswoman for the U.S. Treasury Department, said CFIUS was barred by law from commenting on whether any foreign investment has come under review.

“I can say we strongly support the longstanding bipartisan U.S. commitment to welcoming foreign investment, including from China. Foreign investment creates significant economic benefits, including millions of well-paying jobs, for Americans here at home,” Wyeth said.

But the steel state lawmakers made clear that was not their view when it came to the U.S. steel sector.

“We will continue to fight to protect our domestic steel manufacturers should China attempt to infiltrate American steel companies in the future,” Murphy said.

The United States blocks few foreign investments, and according to one estimate Chinese investment in the United States soared to about $5 billion in 2009 from around $500 million annually in previous years.

However, a Chinese mining company backed out of a deal last year to invest in a Nevada gold mine about 60 miles from a Navy pilot training base after the CFIUS review raised security concerns.

China National Offshore Oil Corp (CNOOC) withdrew its bid to buy Unocal Oil Co in 2005 after many U.S. lawmakers objected on national security grounds.

Additional reporting by Alison Leung in Hong Kong; editing by Mohammad Zargham

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