The White House under President Donald Trump and a group of Democratic and Republican lawmakers are calling for new laws aimed at keeping closer tabs on the inflow of Chinese money into the U.S.
The legislation, if approved, would give the Committee on Foreign Investments in the U.S. (CFIUS) more power to block foreign deals for American companies based on national security arguments. What’s more, it could have a big impact on how tech companies in the U.S. raise money from investors based in China.
“We’ll try to enable CFIUS to take a tougher line against certain investments emanating from those nations that pose a clear threat to our national security, focused particularly in the area of advanced technology,” said Senator John Cornyn, Republican of Texas, who told the New York Times he would propose the legislation.
The report noted that while Trump’s White House has yet to make a formal stance on China deals in the U.S., experts are paying close attention to how the committee deals with the $1.2 billion bid by Ant Financial for MoneyGram and the $1.3 billion bid for Lattice Semiconductor from a Chinese-supported buyout fund. Those two deals come as Chinese suitors are investing a lot more money in the U.S.
Citing research firm Rhodium Group, last year investment in the U.S. from Chinese companies increased to $46 billion compared to 2015, with Chinese buyers purchasing everything from buildings to movie theater chains.
Concerning to lawmakers is the fact that some of the dealmaking is in areas that are sensitive, like semiconductors or startups that are developing advanced technology.
What’s more, critics of China contend the government and companies that are backed by the Chinese government are seeking joint ventures and/or the licensing of technology to get around a review by the committee.
“There is a perception that different financial structures are being used to avoid potential CFIUS oversight,” said Andrew Shapiro, a founder of the advisory firm Beacon Global Strategies and former assistant secretary of state for political-military affairs in the New York Times report. “So they will try to close those loopholes.”