Despite the rapid rise in Chinese investment in the U.S. in recent years, there has been some early speculation that the Trump Administration would not allow the level of Chinese investment to continue at the same rate.
Proposals to limit Chinese investment continue to be floated in Congress. Recent developments suggest however that these concerns are overblown. Prospects for Chinese investment remain bright. At the same time, the Committee on Foreign Investment in the U.S. (CFIUS) retains considerable discretionary authority to block foreign direct investments from China and elsewhere, or to dictate changes to the terms of the deal. Threats to U.S. national security, including the safety of our country’s infrastructure, remain key criteria for CFIUS in its scrutiny of inbound transactions.
China has been quite successful in encouraging foreign investments since the Sino-Foreign Equity Joint Venture Enterprise Law was promulgated in the beginning of the country’s economic reform in 1979.
With the passage of time, the Chinese government has recognized the limitations of the old case-by-case approval regime which is typically time-consuming and burdensome for foreign investors. The government has sought to test various reform measures as seen through the establishment of several Free Trade Zones and new rules that only applied within the boundaries of these Free Trade Zones.
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