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America's review increase on China's investment

  • Author:July
  • Source:www.diecastingpartsupplier.com
  • Release on:2016-02-26

The US has been reviewing a growing number of foreign investments for national security reasons in recent years, with investments from China the leading targets for review, according to new data released by the US Treasury on last Friday.

The disclosure contained in the annual report to Congress of the Committee on Foreign Investment in the US comes amid a number of new mergers and acquisitions out of China being submitted for review. Those include the mooted $42bn takeover of Switzerland’s Syngenta by ChemChina, one of that country’s largest state-owned conglomerates, and a bid announced this week for the Chicago Stock Exchange, which has already drawn calls from Congress for a review.

According to the report released last Friday, CFIUS received 147 notices from companies voluntarily seeking national security reviews in 2014. That number was up from 97 in 2013 and the most seen since 2008, when a record 155 notices were filed.

Less than half of those notices — 52 — were deemed worthy of a subsequent investigation on national security grounds. Just one of these transactions was rejected, while a dozen applications for review were withdrawn voluntarily by companies.

CFIUS releases data on its reviews with a lag of more than a year. It also does not release publicly details of the transactions it reviewed, or the concerns that were raised, although those are contained in a classified version of its report to Congress.

China was the leading source of investments reviewed by CFIUS in 2014, with investors filing 24 notices, just ahead of the 21 filed by investors from the UK.

A senior treasury official said that CFIUS treated investments from China no differently than it did any others. But investments from China have long drawn more political scrutiny than others in Washington. Beijing has repeatedly expressed concerns that Chinese companies are unfairly singled out.

In a letter sent to the Treasury this week, 45 Republican members of Congress asked for CFIUS to conduct a “full and rigorous” review of a proposed bid by a group of Chinese investors for the Chicago Stock Exchange. The deal, if approved, would for the first time give a Chinese company control over part of the US’s equity trading infrastructure, they said.

“Should you determine [that the Chongqing Casin Enterprise Group] maintains a close relationship with the Chinese government — and therefore the Chinese military — we would urge CFIUS to deny this transaction,” the members of Congress wrote.

Chris Brewster, a CFIUS specialist at Stroock & Stroock & Lavan, a Washington law firm, said the committee’s annual report showed that the US still remained open to foreign investment. But he warned that it also indicated the breadth of deals examined by the committee was growing to include things such as real estate.

"Deals are getting approved all the time and the US remains one of the best markets in the world for foreign investment. But CFIUS reviews are also getting more aggressive,” he said.