CFIUS Now Made in China: Dueling National Security Review Frameworks as a Countermeasure to Economic Espionage in the Age of Globalization

Saha, Souvik | January 1, 2012

The era of globalization has produced previously unimaginable economic benefits by spurring linkages between countries through trade and foreign investment. This new found interconnectivity, however, also raises national security concerns for countries, such as the United States, that welcome foreign investment in the form of mergers, acquisitions, and takeovers. Part II highlights one such threat stemming from the rise of China and its aggressive foreign investment strategy to acquire American companies in industries critical to national security. In response to the growing threat of economic espionage from foreign investors, the United States created the Committee on Foreign Investment in the United States (CFIUS)—a national security review process for foreign mergers and acquisitions. Part III analyzes the evolution of CFIUS, while Part IV introduces China’s freshly minted model for analogous national security reviews. Given the rise of these dueling frameworks in the world’s two largest economies, critics contend that such national security reviews inject non-transparency, uncertainty, and politics into viable investment opportunities. Part V addresses these concerns and demonstrates that such criticisms are either overblown or outweighed in the post-9/11 world.