Security review not to block investors

As the world's two largest economies continue discussing a "Bilateral Investment Treaty", which could be a key issue during President Xi Jinping's state visit to the US, it is worth considering how national security considerations could impact the entry of foreign investment.

As the economic and political interests of the US and China continue to grow, so do their national security concerns. The evolution of their legal frameworks on foreign investments and review of the same on grounds of national security reflect this. The 2007 US' Foreign Investment and National Security Act has salient national security review (NSR) provisions. China's 2015 draft of a foreign investment law (FIL) has the same provisions.

The FINSA amended relevant provisions of Sec 721 of the US Defense Production Act of 1950 to enhance national security review. It inserted new definitions such as "covered transactions", "foreign government-controlled transaction", and "national security", as well as "critical infrastructure" and "critical technology" investments - all areas subject to national security review.