Seven US senators have urged Treasury Secretary Steven Mnuchin to limit Chinese companies from taking advantage of stock prices depressed by the coronavirus pandemic to buy strategic US assets.

In the letter, sent on Wednesday by a group led by Republican Senator Marco Rubio of Florida, the lawmakers said they took the action after receiving "disturbing" reports that "government-backed Chinese companies are reportedly approaching banks to identify and facilitate the purchase of American and European companies affected by the pandemic".

China is "looking to exploit the economic crisis wrought by the Covid-19 pandemic to gain control of distressed companies", they wrote, saying it was urgent that the US to protect against such predatory economic behaviour.

The warning comes as other countries take measures to fend off expected Chinese corporate acquisition, in fear that the pandemic could present a buying opportunity for countries like China to scoop up strategically important assets " including technology, aerospace and energy " that have lost value.

A Chinese-backed private equity firm was blocked from buying US-based Lattice Semiconductor in late 2017. Photo: Reuters alt=A Chinese-backed private equity firm was blocked from buying US-based Lattice Semiconductor in late 2017. Photo: Reuters

The European Union told its member governments to consider buying stakes in companies to stave off the threat. India and Australia have also warned about the need to keep key industries from falling into the hands of adversaries.

As Beijing grows more vocal about its global ambitions in technology and military development under President Xi Jinping, Chinese investments in strategic sectors have become an increasingly sensitive issue in the West.

The US was among the first to tighten the oversight by blocking a number of high-profile takeover proposals from Chinese buyers since Donald Trump became president, including a Chinese-backed private equity firm from buying US-based Lattice Semiconductor in late 2017.

Hardliners in the White House have since gained more influence.

Along with Rubio, a long-time China hawk, the other senators signing the letter were Republicans Thom Tillis, Ben Sasse, John Cornyn, Tom Cotton and Mitt Romney and Democrat Jeff Merkley.

The letter was also copied to Secretary of State Mike Pompeo, National Security Adviser Robert O'Brien and the director of the National Economic Council, Larry Kudlow.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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