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1 1 (September 2017)

handle is hein.amenin/aeiaafi0001 and id is 1 raw text is: Key Points * The People's Republic of China is making a concerted effort to acquire American technology through both formation of national funds and bids by individual companies. * The Committee on Foreign Investment in the United States should remain exclusively focused on national security, but the US should extend its investigations beyond traditional mergers and acquisitions, providing the necessary resources to do so. * The US should be concerned with the nature of the American asset involved, not the ownership status of the foreign investor. * Excluding national security concerns, the US should welcome Chinese investors, especially greenfield investors, that obey intellectual property and other laws. In late summer 2012, American decision makers did not need to think much about Chinese investment. The amount of Chinese spending in the US in 2o1 was small and declining, and even Huawei had not pulled a stunt for more than a year.' There have been stark changes since. In late summer 2017, American decision makers have witnessed Chinese investment in 2o16 in the $50 billion range, followed by another $17 billion in the first half of 2017.2 Greater Chinese investment brings economic benefits for the US, the most important of which is job creation or retention. The long-standing American position has been to welcome foreign investment as beneficial. This is correct and should not be changed, but noneconomic factors also need to be weighed. Most pointed, the People's Republic of China (PRC) is making a concerted effort to acquire technology, utilizing both national funds such as the one devoted to integrated circuits and individual bids for American assets such as Lattice Semiconductor.3 The security component of Chinese investment should be handled through the Committee on Foreign Investment in the United States (CFIUS), which is tasked with evaluating national security risk in foreign acquisitions. The top priority should be to reform CFIUS, including provision of additional resources, to ensure the now larger amount of Chinese investment and its more sophisticated nature do not compromise American security. On top of economic benefit and security risk, an underappreciated aspect of foreign investment is ensuring rule of law. Based on the environment in their home market, some Chinese firms can be expected to engage in anticompetitive behavior or fail to meet complex American financial, environmental, and transparency requirements. What is already occurring, worldwide, is violation of intellectual property (IP) rights.4 AMERICAN ENTERPRISE INSTITUTE

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