President Trump issued recently a memorandum aimed at promoting foreign investment while protecting U.S. national security interests, particularly from threats posed by foreign adversaries.
While that term is defined to include China (including Hong Kong and Macau), Russia, Iran, North Korea, and the regime of Venezuelan politician Nicolás Maduro, it is clear that China is the primary target of the new initiative. The memo accuses Beijing of working to “systematically direct and facilitate investment in United States companies and assets to obtain cutting-edge technologies, intellectual property, and leverage in strategic industries” and of pursuing these efforts “in diverse ways, both visible and concealed, and often through partner companies or investment funds in third countries.” In particular, the memo asserts, China-affiliated investors are “targeting the crown jewels of United States technology, food supplies, farmland, minerals, natural resources, ports, and shipping terminals.”
As a result, the memo (1) directs the Committee on Foreign Investment in the U.S. to restrict Chinese investments in the U.S. technology, critical infrastructure, healthcare, agriculture, energy, raw materials, and other strategic sectors, (2) pledges to seek stronger CFIUS authority over “greenfield” investments, (3) asserts that “all necessary legal instruments” will be used to further deter U.S. investment in China’s military-industrial sectors, and (4) vows to consider new or expanded restrictions on U.S. outbound investment in China in sectors such as semiconductors, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, and directed energy.
For foreign investors outside of China, the memo states that restrictions on investment in U.S. businesses involved in critical technology, critical infrastructure, personal data, and other sensitive areas “will ease in proportion to their verifiable distance and independence from the predatory investment and technology-acquisition practices” of China and other adversaries.
On the other hand, the memo outlines measures aimed at further promoting other investments in the U.S. It directs the creation of a fast track process to facilitate greater investment from specified allies and partners, though with conditions that prevent investors from partnering with adversaries in corresponding areas. It also provides for expedited environmental reviews for any investment over $1 billion.
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