China-US Economic Ties

Biden Orders Alert on Deals in Areas of Key China Interest

 

The US Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) has been ordered to monitor deals in key sectors where competition is expected to intensify with China – microelectronics, artificial intelligence, biotechnology and quantum computing.

US President Joe Biden issued an executive order on Thursday directing the committee to focus on these areas, plus threats to sensitive data and cyber security.

In the order, Biden also instructed CFIUS to more closely vet transactions that could impact US leadership in biotechnology and quantum computing, according to senior officials.

“The executive order will help guide the committee and should also help businesses and investors better identify early on national security risks arising from transactions to help them determine whether to file [a report] with CFIUS,” one of the officials said.

US companies making deals with foreign entities are required to file a report with the agency if they meet certain criteria.

The official stressed that CFIUS has already been considering these kinds of risks and has taken action to address them in the past.

 

ALSO SEE: US to Ban Export of Chips, Chipmaking Tools to China

Critical Sectors

CFIUS has become a powerful tool to stymie Chinese investment in critical sectors in the United States.

Under the previous Trump administration, CFIUS ordered China’s ByteDance to divest the US business of popular short video app TikTok because of fears that US user data could be passed on to China’s communist government.

In March TikTok was reported to be nearing a deal for Oracle Corp to store its US users’ information without ByteDance having access to it, hoping to address US regulatory concerns over data integrity on the app.

The Treasury Department said in a report in August that Chinese investors roughly doubled the number of applications they made last year seeking US regulatory clearance for proposed stakes in American companies. read more 

The officials said the new executive order was not specifically aimed at China, although some analysts and news outlets have suggested that it is the key concern.

“Neither this order nor CFIUS as a general matter is country specific (or) is country focused. What the committee does is look at transactions on a transaction by transaction basis to assess national security risks,” one official said.

The order also directs CFIUS to focus on transactions that could put Americans’ personal data at risk and could pose cybersecurity risks.

  • Reuters with additional editing by Jim Pollard

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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