U.S. President Donald Trump has ordered new curbs on investments from mainland China, Hong Kong and Macau in critical sectors in the U.S., hours after China’s Vice Premier He Lifeng spoke with U.S. Treasury Secretary Scott Bessent on February 21. The memorandum, titled American First Investment Policy, stated that the U.S. would “use all necessary legal instruments”, including the Committee on Foreign Investment in the United States (CFIUS), to block China-affiliated investments in American “technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.” An inter-agency committee led by the Treasury Department, CFIUS reviews foreign investments in the U.S. for potential national security risks, and has been strengthened in recent years as U.S. policymakers sought to address perceived threats posed by China.
The memorandum said that investment “at all costs is not always in the national interest”, and asserted that China “systematically directs and facilitates investment in United States companies and assets to obtain cutting-edge technologies, intellectual property, and leverage in strategic industries”.
Framing economic security as national security, the order emphasized that China was targeting the “crown jewels” of U.S. technology, food supplies, farmland, minerals, natural resources, ports, and shipping terminals in “diverse ways, both visible and concealed”. In the order, Trump said that his Administration will “protect” American farmland and real estate near “sensitive facilities”, strengthen CFIUS authority over “greenfield” investments and expand the scope of “emerging and foundational” technologies “addressable” by CFIUS. According to the U.S. Department of Agriculture’s Farm Service Agency, foreign individuals and entities owned approximately 40 million acres of U.S. farm and forest land by the end of 2021, representing over 3% of the country’s privately held land. China owns 384,000 acres of U.S. agricultural land, accounting for less than 2% of all foreign-owned land in the U.S. However, the House Select Committee reports a 30% increase in China’s land holdings since 2019. CFIUS’ authority was expanded in 2018 to include non-controlling stakes in its reviews. Previously, the reviews had been limited to controlling stakes. That change also gave CFIUS more teeth, allowing it to order the undoing of investments, whereas it had previously only made recommendations to the White House, and giving it the authority to undo transactions that had already been completed.
In 2022, then-President Joe Biden directed CFIUS to sharpen its focus on foreign transactions that involve personal data and advanced technologies. Since then, investment from China in the U.S. has plummeted. According to a report published by the Rhodium Group in 2023, direct investments by Chinese entities stood at less than USD5 billion in the previous year, down from USD46 billion in 2016, the South China Morning Post reports.
