The United States appears poised to heighten scrutiny of Chinese investment in Silicon Valley to better shield sensitive technologies seen as vital to US national security, Reuters reports, citing current and former US officials.
Of particular concern is China’s interest in fields such as artificial intelligence and machine learning, which have increasingly attracted Chinese capital in recent years.
The worry is that cutting-edge technologies developed in the United States could be used by China to bolster its military capabilities and perhaps even push it ahead in strategic industries.
The US government is now looking to strengthen the role of the Committee on Foreign Investment in the United States (CFIUS), the inter-agency committee that reviews foreign acquisitions of US companies on national security grounds.
An unreleased Pentagon report, viewed by Reuters, warns that China is skirting US oversight and gaining access to sensitive technology through transactions that currently don’t trigger CFIUS review. Such deals would include joint ventures, minority stakes and early-stage investments in start-ups.
“We’re examining CFIUS to look at the long-term health and security of the US economy, given China’s predatory practices” in technology, said a Trump administration official, who was not authorized to speak publicly.
Defense Secretary Jim Mattis weighed into the debate on Tuesday, calling CFIUS “outdated” and telling a Senate hearing: “It needs to be updated to deal with today’s situation.”
CFIUS is headed by the Treasury Department and includes nine permanent members including representatives from the departments of Defense, Justice, Homeland Security, Commerce, State and Energy. The CFIUS panel is so secretive it normally does not comment after it makes a decision on a deal.
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