President Joe Biden will sign an order to sharpen the review process for foreign money flowing into the United States on Thursday, a measure the White House said would reinforce national security-related attention on sensitive inbound investments.
While an interagency committee already reviews transactions to determine the national security implications, the new order will provide the president’s direction on certain risks.
“This new executive order is a key part of our administration’s broader effort to maintain U.S. economic and technological leadership to protect our national security,” a senior administration official told reporters on Wednesday.
He said the White House’s priorities include supply chain resilience, maintaining American technological innovation, and protecting sensitive personal data belonging to the public.
The official added that the order does not alter or expand the Committee on Foreign Investment in the United States’s legal authorities or jurisdiction.
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Instead, it provides “some sharpened guidance to the committee about [factors the White House considers to be of] emerging importance and ones that you should be focused on as a part of your work,” he said. “We are sending a message … a public message to the private sector in a way the committee’s day-to-day work often can’t.”
A second official said semiconductors, quantum technologies, biotechnology, and artificial intelligence are among the White House’s concerns with emerging and critical technologies.
A third official said recent investigations had ignited the administration’s concerns but declined to note specific cases.
The move shows the White House’s interest in drawing attention to the risks posed by foreign adversaries and its efforts to control them. It also comes as Democrats in key battleground states continue to distance themselves from Biden on China-related issues ahead of the November midterm elections.
Legislation passed under the Trump administration amended the Treasury Department’s CFIUS rules, granting it new reach into deals in which national security was at risk.
In 2021, the first full year since the Foreign Investment Risk Review Modernization Act was implemented, CFIUS reviewed a record number of transactions for national security concerns, according to law firm Kirkland & Ellis.
Inbound investment deals have collapsed under CFIUS’s increased scrutiny.
A leading flow-chemistry company, Snapdragon Chemistry, said last week that its acquisition by Asymchem, a pharmaceutical research and manufacturing firm based in China, fell through after the companies failed to agree on terms that would satisfy CFIUS. Snapdragon said it intended to continue working with Asymchem.
But the administration faces questions over its commitment to a stricter posture. Despite endorsing a plan to screen outbound U.S. investment to China and other countries of concern, a provision to implement this was omitted from the CHIPS Act that the president signed in August.
Purchases of U.S. farmland by state-owned Chinese companies, including around military installations, have attracted renewed attention.
When a spokesman for Biden’s National Security Council was asked about this during a White House press briefing this week, John Kirby responded that he “was probably not the right person to ask about homeownership here in the United States.”
On the call, the first official said Biden’s order would add new factors for CFIUS to consider, including aggregate industry investment trends.
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“A series of transactions over time can increase systemic vulnerability, potentially resulting in a particular covered transaction giving rise to national security risk,” he added.
The White House did not respond when asked whether this increased scrutiny on aggregate transactions would flag the security concerns posed by China’s purchases of U.S. agricultural land.
