Strengthening a key agency's ability to review Chinese purchases of U.S. assets is crucial.
Congress should consider legislation to more effectively address security risks stemming from Chinese investments in the United States, including prohibiting Chinese state-owned or state-controlled entities from buying U.S. assets and requiring mandatory reviews of transactions involving Chinese companies.
These are among the 26 recommendations put forth in the U.S.-China Economic and Security Review Commission’s 2017 Report to Congress, which was released on Wednesday. The commission considers 10 of these 26 recommendations “to be of particular significance,” and specifically urges Congress to strengthen the ability of the Committee on Foreign Investment in the United States (CFIUS) to review and respond to economic and national security risks posed by Chinese investment.
China has gone on a buying spree in the United States in recent years, as the Chinese government seeks to gain market access and obtain new technologies, particularly in communications, agriculture, and biotechnology, the commission reports.
Many of these investments present a risk to U.S. economic and national security interests, as China obtains critical intellectual property and other valuable technological assets. Chinese firms — which are often merely shell companies set up by the Chinese government— are also attempting to invest in “sensitive U.S. industries without obeying normal U.S. regulatory procedures.”
Meanwhile, China does not allow U.S. firms to operate in China without disclosing their intellectual property.
The commission recommends that Congress ensure CFIUS is equipped and better able to “address current and evolving security risks” posed by these Chinese investments. In addition, the commission urges Congress to act to ensure Chinese investors are only granted market access in the United States “on a reciprocal, sector-by-sector basis to provide a level playing field for U.S. investors in China.”
Along with looking at economic issues, the commission looked as U.S.-China security relations, China’s high tech development and China’s growing influence and military presence in Southeast Asia.