Chinese tech firms more confident in facing US national security review

Mainland Chinese companies have again set the pace for the most deals placed under national security review by the United States government as many of them, especially technology firms, are now more confident to submit voluntarily amid growing confidence in the US legal process.

“Filing a notice with Committee on Foreign Investment in the United States (CFIUS), technically, is a voluntary process. But it should be treated as obligatory for sensitive transactions, such as those involving critical infrastructure and technologies,” said Anne Salladin, special counsel at US law firm Stroock & Stroock & Lavan's national security, CFIUS and compliance practice group in Washington.

Salladin pointed out the number of Chinese transactions filed in the latest CFIUS report “reflects the continued significant growth of Asian investment in the United States”.

Mainland Chinese companies have invested roughly US$40 billion in the US since the start of the 21st century, according to a report published last week by the US-China Economic Security and Review Commission. Real estate and information technology were the top-two US sectors for mainland investments last year.

National security has long been an issue in all aspects of the US-China relationship, from politics to business. Some commentators in both countries feared national security could be used as an easy excuse by Washington to turn down Chinese investments when the relationship is strained.

Other analysts said mainland companies have been growing more comfortable with the review process and many of them have begun to submit deals for review voluntarily, rather than wait until the US government comes to them.