A US congressional panel has urged the government to put a ban on Chinese state owned firms from buying US companies. The panel cited security concerns for such action. The recommendation formed a part of the report released by the US-China Economic and Security Review Commission.

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The US-China Economic and Security Review Commission presents its report to Congress every year. The latest report has asked Congress to set up a government panel for reviewing foreign takeover deals. The review will help bar China state-backed companies from acquiring 'effective control' in the US firms.

The commission also recommended an investigation of large-scale outsourcing of manufacturing operation to China. The enquiry will help determining whether such practices lead, "to the hollowing out of the defense industrial base."

The report also pointed out the growing diversification of Chinese investment in the United States. While the panel cited main concern about Chinese acquisition of technological assets, it also conceded that the investments now cover a wide range of areas such as financial services and real estate.

However, the recommendations are not completely unexpected. Following the election of Donald Trump as the next president of the United States, Chinese industrial houses are expected tighter norms from the US. 

Tsinghua University economics professor Li Daokui said, "The general climate in the US will affect China's investment in the US, and it will also cast doubt on the bilateral investment treaty talks."

Meanwhile, the Chinese government has condemned the report. Foreign ministry spokesman Geng Shuang said the report "revealed the commission's stereotypes and prejudices."

TagsUS-China Economic and Security Review Commission, china, Tsinghua University