More stringent US foreign investment rules for China begin in November

WASHINGTON (Reuters) – The federal government will tighten foreign investment rules in sensitive sectors such as technology and telecommunications, the Treasury Department said Wednesday, beginning to enforce a law to limit Chinese investment in 27 sectors sensitive.

The Committee on Foreign Investment in the United States (CFIUS) reviews mergers and stock purchases to ensure they do not affect national security. It was strengthened by the law of the National Defense Authorization Act, which came into force in August.

Most of the group's most prominent work focuses on Chinese companies, many with government links, who have tried to buy high-end US semiconductor manufacturers and other technology companies.

The 27 industries include telecommunications and semiconductors as well as aircraft construction including engines and engine parts, aluminum production, computer storage devices, guided missiles and other military equipment.

Investments in these areas should be reported to the Committee if the role of the foreign investor allows access to non-public information or the power to appoint a member of the board of directors or to make other substantive decisions, said the department.

The CFIUS will have the opportunity to approve an agreement within 30 days or open a more comprehensive investigation, said the department.

"These temporary regulations address specific US technology-critical risks while illuminating the final regulatory development," said Treasury Secretary Steven Mnuchin in a statement.

The pilot program is scheduled to begin on November 10 and last for more than a year, the time to draft official and permanent rules, said a senior administration official.

The interim regulations would likely lead to more filings with the committee, said Sylwia Lis of the Baker McKenzie law firm. "It has a significant impact," she said.

Other parts of the legislation, such as rules allowing the CFIUS to stop land purchases by foreigners near military facilities or ports, will be addressed later, said one official on Tuesday.

CFIUS has taken a firm stance on Chinese and foreign investments in sensitive sectors ranging from high-end semi-conductors to real estate.

In August, for example, he ordered the Chinese conglomerate HNA Group Co Ltd [HNAIRC.UL] to sell its controlling interest in a Manhattan building whose tenants include a police station to protect Trump Tower.

In March, President Donald Trump prevented high-end chip maker Qualcomm from gaining control of Singapore-based Broadcom, citing the panel's concerns over the loss of US dominance over the latest generation of wireless technology. thread.