Invited by the China Council for the Promotion of International Trade (中国贸促企业权益保护中心) and ITS (无讼), Jing Zhang and Mickey Leibner, Mayer Brown LLP attorneys based in Washington DC, hosted a live broadcast to over 900 participants on November 21, shedding light on new trends in the US national security review of foreign investments, as well as sharing practical advice for Chinese investments in the United States.  The text below provides a summary of the live broadcast:

In the past few years, the Committee on Foreign Investment in the United States ("CFIUS") has always closely scrutinized deals involving Chinese investors, and this scrutiny has apparently grown stricter and broader under the Trump administration.  Nevertheless, by estimate, there are still about 50% of deals involving Chinese investments which have been cleared by CFIUS under the Trump administration.

CFIUS is an interagency committee chaired by the Secretary of the Treasury that is authorized to review certain transactions involving foreign investments in the United States and determines the effect of these transactions on the national security of the United States.  CFIUS’ traditional jurisdiction is already broad, covering transactions which could result in foreign "control" of a U.S. business, and CFIUS's definition for "control" is quite broad.  Notably, with important exceptions, CFIUS is a voluntary process.  However, given the fact that CFIUS can recommend that the President block or unwind a transaction for national security concerns, the only way to receive a legal guarantee that CFIUS will not force a divestment or mitigation terms on a transaction is to file with CFIUS.

Jing and Mickey’s presentation addressed, among other things, the following subjects:

  1. Examples of CFIUS reviews of transactions involving Chinese investors, including the TikTok case;
  2. The Foreign Investment Risk Review Modernization Act (“FIRRMA”) enacted in 2018;
  3. The Pilot Program promulgated by CFIUS in October 2018 to implement FIRRMA, broadening CFIUS’ traditional jurisdiction and adding mandatory filing requirement;
  4. Two proposed rules published by CFIUS in September 2019 to fully implement FIRRMA, “Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States” and “Provisions Pertaining to Certain Investments in the United States by Foreign Persons,” focusing on:
    • Real estate investments which are near specified important military and government installations; and
    • Sensitive investments involving “TID U.S. business”:
      • Critical Technologies
      • Critical Infrastructure
      • Sensitive Personal Data
  5. Summary Introduction to CFIUS Filing