Lawmakers are pushing to expand government scrutiny of foreign investment flowing into the United States amid concerns over what one congressman says is a “backdoor effort” by China to buy up military-related American tech firms.
[Guy Taylor | December 12, 2017 | Washington Times]
The North Carolina Republican outlined his concerns ahead of a hearingThursday on a bill he introduced last month to broaden the power of the Committee on Foreign Investment in the United States (CFIUS) — the lone government entity tasked with examining national security threats posed by foreign purchases of U.S. companies.
The Pittenger bill — as well as an identical one proposed in the Senate by Texas Republican John Cornyn — has growing Republican support and is also backed by several influential Democrats, including Sen. Dianne Feinstein of California.
The House Financial Services Committee hearing will feature testimony from former defense officials and cyber technology experts, in what is expected to be the first of several hearings ahead of a push for passage early next year.
Mr. Pittenger, now in his third term, may be the most passionate Capitol Hill voice on the issue, particularly with regard to China.
“China is buying American companies at a breathtaking pace. While some are legitimate business investments, many others are part of a backdoor effort to compromise U.S. national security,” the congressman said in a statement last month. “For example, China recently attempted to purchase a U.S. missile defense supplier using a shell company to evade detection.”
Pittenger staffers says Chinese investment in the United States increased more than 900 percent between 2010 and 2016, with portions of it tied to a strategic push by Beijing to weave Chinese-owned entities deeply into the U.S. economy in a way that facilitates stealing American technology.
“China is weaponizing its investment in the U.S. to exploit national security vulnerabilities, including the back-door transfer of dual-use U.S. technology and related know-how, aiding China’s military modernization and weakening the U.S. defense industrial base,” Mr. Pittenger’s office said in a statement.
Pittenger aides say the congressman began drafting the Foreign Investment Risk Review Modernization Act after becoming increasingly concerned about Chinese state-sponsored attempts to buy certain American financial institutions. The Securities and Exchange Commission is presently weighing a $20 million bid by a China-based investor to buy the privately held parent company of the Chicago Stock Exchange.
It remains to be scene whether the proposed legislation would block such a deal.
The Pittenger-Cornyn bill focuses mainly on expanding CFIUS’ jurisdiction over things like foreign investments in real estate transactions near military bases and other sensitive national security facilities. It also calls for a widening of CFIUS’ authority to block certain investments in emerging technologies seen as essential for maintaining a U.S. technological advantage over countries that pose threats.
“In our global economy, foreign investment from adversarial nations has become a serious national security concern,” Mr. Pittenger said in an interview Tuesday. “Senator Cornyn and I have introduced bipartisan legislation to modernize CFIUS so that federal officials have the tools necessary to block so-called Chinese business investments that threaten national security.”