WASHINGTON – The Biden administration is ordering a panel to scrutinize foreign investments for national security risks to investigate deals that could provide critical technology to China and other adversaries or threaten supply chains and private information.
The executive order signed by President Biden on Thursday does not expand the scope of the Committee on Foreign Investment in America, but rather is intended to sharpen the interagency panel’s focus on administration priorities and indicate to businesses the types of transactions that should be increased. investigation, management officials said.
Thursday’s executive order focuses on foreign investment in the U.S. “to ensure that Cfius remains an effective tool to combat these threats now and in the future,” the White House said in an explanation of the order.
Of particular concern is the security of supply chains and investment where a foreign entity cannot control critical manufacturing capabilities, mineral resources or technologies.
While the order does not identify specific foreign countries, the White House’s explanation of the measure cites risks to foreign investors from “competing or adversarial countries.” Its unique features — protecting supply chains, American information and technologies such as semiconductors, artificial intelligence and biotechnology — are areas where administration and other U.S. officials have previously raised concerns about Chinese investment and espionage.
“Foreign investment is key to supporting American workers, businesses and growth in the United States,” an administration official said. “However…some countries use our open investment ecosystem to pursue their own national security priorities in ways that directly conflict with our values and interests.
According to the directive, the order directs the committee to investigate investments that may pose cybersecurity risks and to look elsewhere for China’s moves and strategies to see if a foreign company or country is trying to acquire multiple companies in the same sector.
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Attempts by Chinese companies and investors to acquire U.S. semiconductor companies have alarmed the Obama and Trump administrations, which have increased caution about Chinese investments. As part of that, Congress In 2018, it expanded the powers of Cephus, which is run by the Treasury Department, to scrutinize deals, scrutinizing small foreign investments in venture capital funds — a tactic some officials say China is using to avoid. Attention.
The Biden administration is closing off other channels for China’s access to the US capital and how it could advance Beijing’s ambitions to control high-tech. National Security Adviser Jake Sullivan has warned that U.S. investment could boost competitors’ technological capabilities, and the administration is considering an executive order to scrutinize U.S. investment in semiconductors and other technologies.
Some U.S. business groups, such as the American Chamber of Commerce and technology investors, have raised concerns about the possibility of screening overseas investments, which they say could be ineffective or too broad and lower U.S. economic impact and competitiveness.
Asked about that, an administration official said the White House is “looking at gaps in our toolkit, including whether it’s appropriate to look at some of the more targeted and narrow requirements.”
China has previously opposed restrictions on Chinese investment in the US, saying such efforts are unfair.
The order directs Cfius to obtain the foreign investor’s sensitive information about Americans and to see if the investor has ties to entities that could use that information to harm U.S. national security.
Write Charles Hutzler at charles.hutzler@wsj.com
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