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CFIUS Reform Set to Further Steer China Away From Sensitive Assets - Lawyers

Dealreporter

18 Sep 2018

In the Dealreporter article “CFIUS reform set to further steer China away from sensitive assets - lawyers” (subscription required), Morrison & Foerster partner Chuan Sun shared his thoughts on the formal codification of Foreign Investment Risk Review Modernization Act (FIRRMA), which would reinforce and ultimately potentially heighten the substantial regulatory that the Chinese investors face.

Sun pointed out that some of FIRMMA’s new provisions, including key definitional terms, will not become effective till the Committee on Foreign Investment in the United States (CFIUS) issues implementing regulations, or no later than 18 months after the law's enactment. Until then CFIUS will have tremendous leeway to interpret and apply policies reflecting FIRRMA’s core principles in evaluating the national security threat.

He also added that, this leeway combined with the tense political macro-environment as a result of the persisting trade war between China and the US, bodes ill, at least in the short term, for Chinese buyers to clear CFIUS swiftly, especially if they invest in sensitive sectors. So, substantial headwinds will likely continue until there is an improvement in the political macro-environment and an end to the trade war. 

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