Bipartisan worries about China’s sudden investment surge in the United States has prompted new legislation that would strengthen an obscure and secretive agency that has the power to block foreign acquisitions of U.S. companies.
Top Senate leaders from both parties are working on separate tracks to produce legislation that would reform the Committee on Foreign Investment in the United States, a panel made up of anonymous board members from a variety of government agencies who operate under the Treasury Secretary to approve or disapprove the sale of U.S. companies and property to foreigners.
The committee hasn’t been reformed in a decade. But lawmakers in both parties are suddenly worried CFIUS may need to be strengthened because of a sharp uptick in Chinese investments in America, which in the past year have jumped from less than $20 billion to more than $50 billion, according to the American Enterprise Institute, which closely tracks China’s global investments.
“When you get a number like that, you get even members of Congress to pay attention,” Derek Scissors, an AEI scholar who focuses on the Chinese and Indian economies and U.S. economic relations with Asia.
Lawmakers on Capitol Hill are worried about the impact of Chinese investment here on both the economy and national security.
Senate Majority Whip John Cornyn, R-Texas, believes CFIUS needs a rewrite to ensure sensitive technology and military information isn’t transferred to the Chinese, who are steadily increasing their acquisitions of U.S. companies and property, including attempts to buy tech firms.
Cornyn is drafting legislation that would require CFIUS to employ a classified list of “countries of concern” that are considered a potential military threat to U.S. national security interests. The bill would require CFIUS to use increased scrutiny when reviewing the sale of U.S. property to those countries.
Cornyn’s bill would expand the kinds of transactions CFIUS can review to include joint ventures and property near military bases.
Cornyn’s Democratic counterpart, Minority Leader Charles Schumer, D-N.Y., believes the United States is “getting the short end of the stick,” when it comes to economic deals with China. He is working on a bill that could direct CFIUS to be more strict on deals that cause economic harm.
Schumer is also looking at legislation that is aimed at nudging the Chinese to lift restrictions to U.S. market access in China.
“China has been eating our lunch and stealing our jobs for far too long,” Schumer said in a statement provided to the Washington Examiner. “It’s past due for the U.S. government to use all tools at its disposal to protect the U.S. economy and American jobs, and that includes expanding the authority CFIUS to review, investigate and block deals where the U.S. gets the short end of the stick.”
Those working closely with lawmakers in both parties on CFIUS say legislation is a certainty, but whether it passes, and in what form, will also hinge on President Trump, who some believe is on the verge of igniting a trade war with China by imposing tariffs on Chinese goods.
Scissors said Trump’s worry over the trade deficit with China may not mean that he will also want to restrict the Chinese from investing in the United States for purely economic reasons.
“I think the president is probably generally in favor of the Chinese investing in the United States,” Scissors told the Washington Examiner. “It has the potential of at least creating jobs. It’s not like imports from China, which he thinks is hurting jobs.”
