China Is the Top Foreign Investor in U.S. Firms Critical to National Security

A Huawei booth at a telecommunications trade show in Hanover, Germany. Huawei, a Chinese company, recently came under congressional scrutiny after attempting a bid to enter the U.S. telecommunications market

Nigel Treblinka/DAPD

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A Huawei booth at a telecommunications trade show in Hanover, Germany. Huawei, a Chinese company, recently came under congressional scrutiny after attempting a bid to enter the U.S. telecommunications market

A U.S. government report says that Beijing has outstripped major allies, including the United Kingdom and Canada, in investing in sensitive industries. By Tim Fernholz

China overtook the United Kingdom last year as the country that received the most scrutiny of its US investments, according to the US government.

The Committee on Foreign Investment in the US (CFIUS) is charged with reviewing mergers, acquisitions, and other transactions where a foreign entity might take control of a US firm that makes “critical technology,” provides services to the government or military, accesses classified information, or might otherwise provide malicious actors with some way to hurt the US.

Since 2010, CFIUS has reviewed 318 proposed transactions, most of which were in the manufacturing sector; 40 were withdrawn after reviews began. President Obama only weighed in on one decision, terminating a transaction where a Chinese-controlled corporation could build a wind farm near a US naval weapons research facility. The increase in attention to China likely reflects growing investment, not a pattern of targeting sensitive businesses, the declassified report suggests. But it is notable that among the top ten economies investing in firms covered by CFIUS, China is the only one that is not explicitly a US ally.

If investment isn’t being driven by a desire to acquire technology, CFIUS notes there are other ways to access critical tech:

That’s a somewhat ironic conclusion given the latest news about NSA spying, which details UK and US intelligence agencies listening in the European Union’s top anti-trust regulator, perhaps for the purpose of industrial espionage.

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