President Joe Biden signed an executive order Thursday that could block foreign investment in U.S. sectors if it’s considered a national security risk.
Although the White House said the new order is not country-specific, it comes amid growing concerns among US officials about China’s investment in the US technology sector and other industries.
Government officials said the order will strengthen oversight by the United States Committee on Foreign Investment, a group of several agencies charged with reviewing deals and mergers involving foreign people and entities.
Areas where deals can be blocked include “microelectronics, artificial intelligence, biotechnology and bioproduction, quantum computing, advanced clean energy and climate adaptation technologies,” according to a White House summary.
The committee, known as CFIUS, is made up of members of the Ministries of State, Defense, Justice, Commerce, Energy and Homeland Security and is headed by the Secretary of the Treasury.
President Joe Biden signed an executive order Thursday that could block foreign investment in U.S. sectors if it poses a national security risk
Sectors include areas such as artificial intelligence, quantum computing, microelectronics and more, the White House said
It sends its findings and a recommendation to the president, who has the power to suspend or ban a deal.
The order calls on CFIUS to consider whether a foreign investment or sale could affect the resilience of critical U.S. supply chains and the impact it could have on U.S. technology leadership in areas that affect U.S. national security and security. broader investment trends.
It also calls on CFIUS to consider cybersecurity risks that may arise from a transaction and states that the risks to sensitive data of US residents must also be considered.
“President Biden’s executive order highlights CFIUS’ increasing focus on national security risks in several key areas and sharpens the commission’s focus on protecting U.S. national security while preserving U.S. open investment policies,” Treasury Secretary Janet said. Yellen in a statement. “Strengthening our supply chains and protecting against foreign threats improves our national security, and this executive order highlights the important role of CFIUS in that work.”
Biden’s executive order comes after CFIUS’s oversight role over foreign investment was significantly expanded by 2018 legislation passed by Congress.
CFIUS has already considered many of the criteria laid down in Biden’s executive order, according to senior government officials, who informed reporters about the condition of anonymity under the ground rules established by the White House.
But the officials added that the government hopes by publicly highlighting and sharpening the committee’s focus on what the government sees as emerging risks, it will give businesses and investors greater clarity when looking at national security risks that could arise from a possible transaction.
Prior to the 2018 legislation, CFIUS investigated cases where a foreign company’s attempt to acquire or merge a U.S. company with a U.S. company could pose a national security risk.
The 2018 legislation expanded CFIUS’s oversight to review certain joint ventures, minority interests, and real estate transactions near military bases or other sensitive national security facilities.
The legislation was prompted by complaints that Chinese companies exploited loopholes in US law and improperly obtained technology and potentially sensitive information.
US lawmakers have also expressed concern that Chinese companies are using joint ventures with foreign companies or minority stakes in companies to gain access to sensitive technology.
An annual Treasury Department report released in August showed Chinese investors more than doubled the number of applications they filed for approval from US regulatory authorities on proposed deals by 2021.