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14 Berkeley Bus. L.J. 1 (2017)

handle is hein.journals/berkbusj14 and id is 1 raw text is: 










    Investing near the National Security Black Hole

                                    Ji Li*

    Multinational corporations dominate the global economy. Their aggressive
business expansion has led to occasional conflicts with some sovereign
governments' core interests. The most irreconcilable one is probably between
foreign direct investments by multinationals and the need of sovereign states to
safeguard their national security. his article empirically explores the tension
in its most manifested case, i.e., the reactions of China-based multinationals to
the highly confidential national security review system of the United States, also
known as the Committee on Foreign Investment in the United States (CFJUS')
review. Ifind that, contrary to conventional wisdom, most Chinese investors
know little about CFIUS. The majority of those who have some knowledge about
it consider the process politicized and non-transparent. A minority reported to
have abandoned contemplated investments in the United States due to concerns
with CFUS. Variations in the perception and the reactions of the China-based
multinationals generally turn    on  their government ownership, sectoral
sensitivity, and investment size. In addition, the recent landmark decision in
Ralls v. CFIUS has a significant impact on the investors'perception of the
system, but has not altered their filing behavior. The findings make several
important theoretical and policy contributions.

In tro d u ction  ........................................................................................... . .  2
I.The Evolution of the CFIUS  Regime .................................................... 3
II.L iterature  R eview   ...............................................................................  10
III.To File or Not to File?-The Foreign Investor's Decision Tree ......... 13
       A . Pre-R alls  Calculation  ............................................................  15
       B. The D.C. Circuit Decision in Ralls Has Changed the
            C alcu lation  ........................................................................ . .  18
IV. Chinese Investments under the CFIUS Regime ............................. 20
       A. Chinese Investments in the United States ............................ 20
       B. The Surveys of Chinese Companies in the United States ......... 21
       C. Empirical Overview of the Survey Data on Chinese Investors
            and C F IU S  ........................................................................ . .  23

DOI: https:Hdx.doi.org/10.15779/Z38FQ9Q496
*   Associate Professor, Rutgers Law School; J.D. Yale Law School; PhD. Northwestern University;
email: ji.li#law.rutgers.edu. The author would like to thank Stuart M. Benjamin, Jim Cox, Adam Chilton,
Stuart Deutsch, Douglas Eakeley, Taja-Nia Henderson, David Noll, John Leubsdorf, Sabrina Safrin, Reid
Weisbord, Huyue Zhang, Wei Zhang, and other participants of the 11 th Annual Conference on Empirical
Legal Studies (CELS) at Duke Law School and the faculty colloquium at Rutgers Law School.

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