Proposals before the U.S. Senate and House to tighten rules on foreign investment into critical technologies could cause companies to take their research and development overseas to avoid scrutiny, critics said on Thursday.
Businesses that see risks from the bills testified at a hearing by the Senate Committee on Banking, Housing and Urban Affairs. The bills before the House of Representatives and the Senate would allow the inter-agency Committee on Foreign Investment in the United States, known as CFIUS, to review minority investments and some intellectual property arrangements.
International Business Machines Corp
"This bill would impose a very onerous - and entirely unilateral - set of restrictions on outbound transactions of U.S. companies," Padilla said in written testimony.
Scott Kupor, chair of the National Venture Capital Association, said Chinese investments in U.S. funds could make those funds vulnerable to CFIUS reviews if they tried to invest in high-tech companies, even though those investors were given no sensitive information beyond valuation and accounting data.
Republican Senator John Cornyn, the driving force behind the bill, told the committee that he was an ardent supporter of foreign investment but that investment from China needed new, tougher scrutiny because of the threat it poses.
"China uses both legal and illegal means to turn our own technology and know-how against us and erase our national security advantage. One of these tools is investment," Cornyn told the committee.
Former Democratic President Barack Obama had increased scrutiny of Chinese investment, but Republican President Donald Trump`s administration has taken a harder line on issues ranging from Beijing`s role in restraining North Korea to Chinese efforts to acquire U.S. strategic industries.
The hearing came a day after CFIUS approved a $15 million deal for Beijing-based Naura Microelectronics Equipment Co Ltd to buy Akrion System LLC, a U.S. semiconductor manufacturing equipment company.
The approval is one of only a handful granted to Chinese transactions by CFIUS under the Trump administration. The agency has killed a series of high-profile deals since Trump took office.
The Senate version of the CFIUS bill has 10 co-sponsors. The House version, which recently picked up Representatives Pete Sessions as a co-sponsor, has 23, according to a congressional aide who spoke privately.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)