The China Question

www.worldecr.com 36 ThE ChInAquESTIOn INSIgHT approach using both the Defense Production Act and IEEPA authorities. Notably, the Trump administration had created under the IEEPA authorities a CFIUS-like review mechanism for the Secretary of Commerce to review transactions involving so-called Information and Communications Technology and Services (‘ICTS’) sold by a ‘foreign adversary’, inclusive of China. In the same executive order revoking the TikTok ban, President Biden directed the Secretary of Commerce to consider additional measures under the ICTS rule. While there has not yet been any public enforcement under the ICTS review process and very little guidance, it could evolve as a shadow review process to potentially capture transactions that would otherwise be outside of the Committee’s jurisdiction. While FIRRMA has drastically cut Chinese tech investment in the United States, some areas of Chinese funding and influence remain, and this is attracting the bipartisan attention of US lawmakers. In particular, the proposed Strategic Competition Act – which was recently passed by the Senate as part of the omnibus US Innovation and Competition Act and awaits House of Representatives action – would expand CFIUS’s jurisdiction to allow review of certain foreign gis and grants awarded to US universities. proceed with caution Concern about Chinese strategic objectives has been the driving force in the rapid transformation of CFIUS since 2018, and is likely to be the primary impetus for future reviews before the Committee. Although expanded CFIUS jurisdiction under FIRRMA has significantly depressed Chinese investment in the United States, additional areas of concern remain and are likely to continue. ere appears to be broad support within the US government to creatively use a variety of remedies – from increased resourcing to executive action to legislative solutions – to close perceived gaps. Chinese companies with investments in the United States and US companies that receive Chinese investments should track developments in US policy regarding foreign investment review and exercise caution in increasing or making new investments in the future. o Ryan Fayhee leads the Sanctions, Export Controls & Anti-Money Laundering practice group at Hughes Hubbard & Reed in Washington, DC, where Roy (Ruoweng) Liu is a partner and Chair of the firm’s Greater China practice group, and Tyler Grove is an Associate. www.hugheshubbard.com WorldECR, the journal of export controls and sanctions Subscribe today. Visit www.worldecr.com/subscribe