CHINA WATCHAmid Fears of Chinese Influence, the Committee on Foreign Investment in the United States Has Grown More Powerful
The Committee on Foreign Investment, a U.S. government interagency committee established in 1975 by President Gerald Ford, is tasked with studying and coordinating the implementation of policy on foreign investment in America.The primary objective of the committee is to review selected foreign investments and some real estate transactions by foreigners in the U.S. for their national security implications.
A Chinese private equity firm, Primavera Capital Group, acquired the well-known test preparation company Princeton Review and an online learning platform, Tutor.com, in May 2023.
The move, like other Chinese investments in tech and those that deal with personal information, is increasingly drawing the attention of politicians, the U.S. government and national security experts – especially as tensions rise between the U.S. and China.
What remains unclear, however, is if this seemingly routine business acquisition was reviewed by the Committee on Foreign Investment in the U.S., which has authority to examine transactions involving foreign investment. The committee is largely prohibited from publicly disclosing any information filed with it, including if it is reviewing a transaction or if one was referred for review.
While the committee is hardly a household name, its mission and expanding oversight have important implications for the U.S. economy and national security.
Government Oversight
The Committee on Foreign Investment, a U.S. government interagency committee established in 1975 by President Gerald Ford, is tasked with studying and coordinating the implementation of policy on foreign investment in America.
Investment by foreign countries greatly benefits the U.S., supporting 10.1% of the total labor force in 2019. Yet beginning in the 1980s, the federal government grew increasingly concerned about potentially harmful effects of foreign investment in the U.S. For example, if a foreign firm gets control of sensitive technologies, it could hurt national competitive advantages or even threaten national security.
The primary objective of the committee is to review selected foreign investments and some real estate transactions by foreigners in the U.S. for their national security implications. Real estate transactions are generally scrutinized only when a transaction involves land that is either close to a military base or near an airport or seaport.
Vetting Foreign Investments
In the 1980s, political concern grew about Japanese investment and, specifically, the proposed purchase by Japanese computer giant Fujitsu of chipmaker Fairchild Semiconductor. The purchase of Fairfield Semiconductor was considered a sensitive industry, with potential defense applications, and prompted Congress in 1988 to pass the Exon-Florio amendment to the Defense Production Act of 1950.
