The Fate of Chinese Investment and CFIUS in the Time of Trump

by Garvey Schubert Barer

Over the last few years the pace of Chinese direct investment in the U.S. has increased at a remarkable rate. In 2016 the $45 billion of Chinese acquisition and expansion in the U.S. was three times the amount in the preceding year. The accelerating investment curve in turn has fueled a nine-fold increase since 2009 in the number of Americans directly employed by Chinese-owned firms. It now hovers around 140,000 new jobs. And at the beginning of 2017, another $21 billion in scheduled U.S. acquisitions by Chinese companies was already in the pipeline.[1]

There have been a number of dire predictions that all this Chinese direct investment into the U.S. would be in serious jeopardy under the new Trump Administration. This concern has been fueled by some of President Trump’s attacks on Chinese economic policies during the 2016 presidential campaign and by some proposals from individual members of Congress. In reality, President Trump to date has taken no step to curb Chinese investment in the U.S. Recent statements suggest to the contrary that the Administration overall favors continuation of existing foreign investment policies, while leaving room for minor changes. Even during the presidential campaign last year, Mr. Trump’s opposition to China on the economic front emphasized the unfavorable balance of trade. He did not champion a policy of opposing Chinese investment in the U.S. outright. Once President, he moderated his views on trade with China, as he has openly expressed the importance of easing tensions on the economic front to ensure greater cooperation from China on the national security issues posed by North Korea. Moreover, President Trump recently reversed his views in the campaign, and no longer sees China as a currency manipulator.

The situation requires close monitoring because there are political forces pushing for significant hardening of investment policies towards China, and U.S. restrictions on foreign investment may stiffen around the edges. The threat of a broad new anti-Chinese investment policy, however, appears over stated. In most cases, Chinese investors should not be deterred by fear of opposition from the U.S. government.

Narrow Scope of CFIUS Review

The U.S. government controls foreign investment in the U.S. primarily through an interagency committee called the Committee on Foreign Investment in the U.S., or CFIUS. It is chaired by the Treasury Secretary, Mr. Steven Mnuchin. On May 1, he publicly rejected the idea that CFIUS should block foreign investments on the basis of any grounds except national security. And he rejected using the process to target China or any other particular foreign investor. In the face of proposals from members of Congress to increase sharply restrictions on Chinese investment, he hinted that any changes to the CFIUS law should be minor in nature, and none should be targeted specifically at China. In another interview in April, he placed improving the trade balance with China ahead of any concern over investment issues, and said when the Administration does address investment issues it would be to loosen restraints on U.S. investment in China rather than restrict Chinese investment in the U.S.

Key to assessing the threat of unfavorable CFIUS action is understanding its narrow scope. It does not cover every type of transaction, and it does not authorize the U.S. government to block any deal that is covered except on the relatively narrowly defined grounds of national security. As to coverage, the law only applies to foreign acquisitions of control over ongoing U.S. businesses. Importantly, the law does not apply to greenfield investments or deals involving assets that are not considered an ongoing U.S. business (e.g., individual parcel of land, abandoned warehouses, etc.), not does it apply to most types of loans, or to investments that do not involve foreign control (e.g., less than 10% ownership).  Even if a particular transaction is a type covered by the law, CFIUS is interested only if the deal raises national security concerns. This may happen, for example, if the deal gives the acquiring foreign company access to military weaponry, electronics, and other advanced technology with military implications (e.g., advanced computers and semi-conductors). It may raise national security issues if the deal could affect Defense Department access to goods or services of all sorts important to the Department. National security concerns also include possible threats to U.S. protections against espionage or breach of cyber security, the safety of critical infrastructures (e.g., energy, telecommunications, transportation), and other critical industries that may affect national economic security, or homeland security. The law authorizes CFIUS and ultimately the President to block a transaction on national security grounds, or to require the mitigation of a threat to national security before it can proceed.

CFIUS’s Treatment of Chinese Transactions

The present law does not single out Chinese investments for more searching review by CFIUS. In addressing the issue last year, the former Deputy Assistant Secretary for Investment Security at the Treasury Department confirmed that CFIUS conducts its reviews of Chinese transactions no differently than transactions from any other country. As noted, Secretary Mnuchin’s recent statements are consistent with that policy. And although the committee is made up of politically appointed heads of federal departments and offices, the working staff of CFIUS are career civil servants who perform their responsibilities without national prejudice.

As a general matter, most deals submitted voluntarily to CFIUS are approved without condition. According to the Treasury Department in 2014 (the most recent year for which figures are available) less than 9% of the 147 deals submitted to CFIUS did not proceed either because of CFIUS opposition or for commercial considerations.[2] In another 6% of the deal CFIUS required adoption of measures to mitigate the national security concerns before they proceeded. As in deals involving other countries, the relatively few Chinese deals that encounter trouble at CFIUS typically present straightforward national security issues. Illustrative are several recently terminated transactions involving Chinese companies seeking to acquire businesses engaged in the development of semiconductor and related LED technologies—Lumileds (a Dutch company with a division in the U.S.), Aixtron SE (a German company with a U.S. subsidiary), and Global Communications Semiconductors, LLC (a U.S. company)—because of apparent concerns of CFIUS about the military applications of that technology. Two potential transactions currently attracting headlines also raise national security issues. A proposed $2.3 billion bid by Zhongwang USA, a Chinese-owned business, to acquire Aleris Corporation, a U.S. sheet metal producer, has provoked public attention and CFIUS scrutiny. Aleris produces and develops aluminum and other materials used in military airplanes generally, and in particular produces ballistic-resistant aluminum with national security implications. In another developing matter, the Trump Administration has made it clear that CFIUS would take a critical look at any direct or indirect Chinese involvement in the acquisition of Westinghouse Electric, Inc., a maker of nuclear reactors for electric utilities, because of the military and civilian application of the company’s nuclear technology. 

Recent Proposals for an Expanded CFIUS Mandate

Various members of Congress who are dissatisfied with the relatively narrow, national security focus of CFIUS are campaigning to broaden the law’s scope. Some are aimed at changing the scope of CFIUS concerns to include threats to specific sectors not ordinarily associated with national security concerns, such as a March 2017 legislative proposal to include concerns about the security of U.S. agricultural and the related food-chain. Others have focused more specifically on Chinese investment, as both Senate Minority Leader Schumer and Senate Majority Whip Cornyn are reportedly working on different proposals to broaden the scope or extent of CFIUS’s national security review of Chinese transactions. This is in the wake of a proposal last November by the U.S.-China Economic and Security Review Commission to bar Chinese state-owned enterprises from acquiring effective control of U.S. companies.   Other members of Congress recently asked the research arm of Congress (the Government Accountability Office) to review whether legislation should require CFIUS to review all transactions involving Chinese state-owned businesses, require CFIUS to assess the net economic benefit of foreign acquisitions, or take into consideration whether the acquiring company’s government allows foreign investment from the U.S. to the same extent. For example, in testimony during his confirmation hearings, Commerce Secretary nominee Wilbur Ross Jr. highlighted complaints that while Chinese firms are moving to acquire U.S. firms in the entertainment and media sectors, the Chinese government largely bars U.S. firms acquiring Chinese companies in the same sector.

Steps to Take to Protect Against Problems with CFIUS

Overall, important factors are likely to encourage the U.S. government to protect Chinese investment. Continued open access to foreign investment in American industry provides a quick and welcome return on the new Trump Administration’s central policy tenet of improving job prospects for workers in the U.S. And billions of dollars in direct investment by Chinese-owned companies bring more and better-paying domestic jobs and improved economic conditions in almost every congressional district. The value of this will not be lost on the Administration or congressional policy makers. As we have seen, Treasury Secretary Mnuchin has expressed Administration support only for very limited amendments to the CFIUS law. Nevertheless, the variety of legislative proposals being considered in Congress reflect significant congressional interest in tightening the CFIUS process, especially with respect to China. The position of the Trump Administration on targeted changes that would adversely affect Chinese investment is uncertain, and the uncertainties and tradeoffs inherent in the legislative process always makes it possible that broader legislation harmful to China could emerge from Congress.

Given the political climate in the United States, it is more important than ever that Chinese-owned businesses and investors that wish to expand their holdings in the attractive U.S. marketplace proceed from the outset with a thorough understanding of the processes and factors that CFIUS will use to evaluate, modify, or possibly unwind a transaction based on perceived threats to the national security apparatus and infrastructure of the U.S.

Anyone considering the possibility of a U.S. acquisition should monitor policy developments in the Trump Administration and Congress that could impact those goals. When a Chinese investor comes closer to achieving acquisition of a U.S. company, the deal negotiations should proceed with careful attention to the issues posed by the authority of CFIUS to block or require changes to a proposed deal. By conducting an intelligent CFIUS assessment, structuring perceived security risks at the beginning of a transaction, and considering risk-mitigation measures as necessary throughout the process, Chinese investors can navigate CFIUS review in most cases with high expectation of success.

A variety of procedures are available that can and often do dispose of concerns that the U.S. will block a transaction on national security or critical infrastructure grounds. Up front, investors should examine whether the proposed deal is in fact a covered CFIUS transaction under the law. That may not always be obvious, but a decade of experience since the prior amendment to the law provides guidance on where the fault lines may be found. It also will be critical to structure the transaction with care as to how control and direction of the new venture will be distributed among foreign and domestic owners. It may be advisable to include terms requiring CFIUS approval and addressing contingent losses in the event CFIUS recommends withdrawing a transaction, or imposes risk mitigation requirements. Investors should also give advanced consideration to public messaging about a transaction to help curb calls from interest groups or Congress for closer CFIUS scrutiny. A strategic approach to these concerns are essential to any Chinese investment that might touch on national security or critical infrastructure issues.


[1]               Report of the National Committee on U.S.-China Relations & Rhodium Group, New Neighbors: 2017 Update (Apr. 2017).

[2]               CFIUS 2014 Annual Report to Congress, dated by the Committee, February 20, 2016.

Written by:

Garvey Schubert Barer

Garvey Schubert Barer on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.