The Effect of CFIUS Scrutiny on Chinese Investments

April 30, 2024 | BY

Clarence Lee

Although CFIUS reviews have become more challenging for Chinese companies, transactions could still go ahead with a few tips in mind.

Summary

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  • CFIUS has now widened the scope of its inquiries, affecting more and more China-related transactions
  • This leads to lengthier reviews of Chinese transactions
  • Non-Chinese parties with operations in China could also be subject to CFIUS reviews
  • Although the outcome of a CFIUS review ultimately depends on the individual case, lawyers suggest companies prepare for CFIUS scrutiny and questions well in advance

The Committee on Foreign Investment in the United States (CFIUS), the agency that reviews foreign investment transactions in the U.S., has targeted an increasing number of Chinese companies and instigated lengthier, more detailed reviews of their transactions, lawyers say. Nonetheless, they stress that such transactions can still go ahead, and companies should keep certain points in mind to ensure a smoother process.

This article will first analyze the trends of CFIUS' approach to foreign investment review, its implications on Chinese companies seeking to invest in the U.S., CFIUS' scrutiny of non-Chinese parties' China operations, in-house preparedness, and solutions to mitigate risks.

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