Congress should update the charter of the Committee on Foreign Investment in the United States (CFIUS) and provide it more resources to address the realities of modern-age state capitalism.
CFIUS is an inter-agency committee authorized to review transactions that could result in control of a U.S. business by a foreign entity (“covered transactions”), in order to determine the effect of such transactions on the national security of the United States. Current CFIUS regulations state that examiners must review covered transactions on a case-by-case basis. But because the threat to both the U.S. defense industrial base and the U.S. industrial base overall is systemic, the CFIUS charter needs to be updated to address the realities of modern-age state capitalism—particularly the threat from SOEs—by allowing reviewers to assess and gauge systemic threats and examine covered transactions in a broader context. Congress should also increase the time period permitted for an initial CFIUS review and also better equip CFIUS with additional personnel and financial resources to support more thorough reviews.