Trade Security Journal Publishes Akin Gump Article on CFIUS Risks for Chinese-U.S. Deals

Trade Security Journal has published the article “CFIUS risk grows for Chinese-backed investment in the United States,” written by Tatman Savio, a partner in the international trade practice at Akin Gump, counsel Christian Davis and law clerk Thor Petersen. The article reports that, while Chinese investment in the United States has increased dramatically, it has also led to increased scrutiny of various deals.

With direct investment from China tripling in 2016 from the previous year to $46 billion, and with state‐owned companies have regained their prominence in Chinese‐U.S. deals during the first half of 2017, Savio, Davis and Petersen write that it should not be surprising to learn that Chinese deals have faced increasing scrutiny. They note that, since mid-2017, they have seen “no public reports of a China‐related transaction obtaining CFIUS clearance.” They then proceed to list the status of several proposed deals from this year.

The authors conclude that it is a challenging environment for Chinese investment in the United States, so parties to a transaction should carefully assess the associated CFIUS risks. In this regard, they say, “the parties must perform a robust CFIUS analysis and evaluate whether CFIUS has jurisdiction to review transactions, including in minority investment structures and deals that involve multinational targets headquartered outside the United States.”

After understanding the risks, the add, “the parties can make a decision regarding the feasibility of the transaction, mitigation measures that may be needed to proceed, and whether and how to engage with CFIUS.” Failure to consider a CFIUS strategy, they warn, could leave a deal in peril.

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