US Ramps up Scrutiny of Chinese Companies Buying American Tech Firms
Marketplace reported earlier this week that “Over the past few years, the United States government has increased its scrutiny of foreign acquisitions of American companies and the export of certain technologies. That scrutiny has been particularly heightened when the buyer is Chinese. It’s a trend that is expected to continue under the Biden administration, but it’s not without economic cost.”
Big Picture: In 2018, Congress expanded CFIUS and its largest division is now looking at deals that have already been completed to make sure none got through that shouldn’t have.
AF Partner David R. Hanke, who was the primary staff architect of FIRRMA and the chief strategist behind its 2018 enactment, told Marketplace that, “The pandemic has expanded the focus of CFIUS to consider things that previously might not have been thought of as national security.” This includes pharmaceuticals and real estate, which could be near sensitive sites.
Marketplace added that the “increased scrutiny has led to an intended chilling effect. Chinese foreign direct investment in the U.S. has slowed since 2016.”
In Addition: The Commerce Department has started to pay closer attention to what the United States exports to China. For instance, it blocked the export of certain supercomputers in early April out of concern they would build up Chinese military technology.
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