Our blogpost on August 4 detailed the controversy generated over the investment by China’s Anshan Iron & Steel Group in exchange for a minority position in a $175 million rebar steel facility of Mississippi’s Steel Development Corp. Anshan Iron & Steel Group also is known as AnSteel. The two July letters from the Congressional Steel Caucus to Secretary of the Treasury Geithner demanding CFIUS review have led to no indication of U.S. regulatory action.

On August 16, John D. Watkins, Jr., chairman of the American Chamber of Commerce in China, published an articulate appeal for a studied approach to the controversy, noting the national importance of fulfillment of pledged reciprocity for free flow of trade and investment between China and the U.S.

The controversy now has generated its own puzzle within. On August 19 there were widespread media reports that Chen Ming stated that his firm was backing away from the deal, referencing its small chances for approval. Mr. Chen is a vice chairman of AnSteel’s publicly traded subsidiary Angang Steel Co. The Financial Times, however, reported that the Committee on Foreign Investment in the United States had not vetted the deal, despite the two letters from the Congressional Steel Caucus demanding that it do so. This may have been because the parties structured the deal in a way that it did not fall within the regulatory mandate of CFIUS.

The Wall Street Journal reported on the following day that Anshan had not given up its intention to make the investment and that the August 19 announcement was an error. According to this report, AnSteel was working closely with SDC in moving the project forward. The China Post and Chinavestor blog both also reported AnSteel’s abiding interest.

The two announcements cancel each other out. We are left to wonder whether the Congressional Steel Caucus letter will achieve its intended effect. More likely is that these two twists are not the last in this affair that matches Congressional special interests against broader national interests as mid-term Congressional elections grow nearer.