The Research On The United States National Security Review For China's Foreign Direct Investment

Within the past few years,China's foreign direct investment in the United States has been investigated by the U.S.National Security very frequently.China has received the most national security reviews by the United States from 2012 to 2017.All of the foreign investments vetoed by the President of the United States were coming from China since 2005.In the meantime,the United States has been constantly involved in Chinese investment in other countries.Chinese foreign investment has even been repeatedly affected or forced to terminate by the national security review of the United States.The Foreign Investment Risk Review Modernization Act issued by the United States in 2018 further strengthened the national security review for foreign investment,which is even worse for Chinese investment already facing severe review.Chinese investment repeated under review in the United States may be due to the fact that Chinese investment in the United States may be affected by the national security issue,but what's behind it is the competition between China and U.S.among many fields,such as politics,economy,culture and etc.The competition situation is also the fundamental reason why Chinese investment in the U.S.faces a higher risk of a national security review.Therefore,it is very important to clarify the influence of domestic and international political and economic interaction on the review and distinguish the essence and core risks of the review.It is also the reason why this paper chooses “Theoretical Paradigm of International Political Economy: state-centered realism” by Robert Gilpin as the theoretical basis to study the national security review of the United States.The United States had built a national security review system for foreign investment around its national interests.The United States got benefits from the national security review of investment because of few intervene from foreign countries.Compared with declining benefits,lagging economic development,changing situation for international investment and shortening between competitors,the U.S.national security review tightened to protect its initiative for national interests.These changes are reflected in the revision of the review basis and the adjustment of the review body.The renewal of the main contents of the legislation,implementation rules,and guidelines,and executive orders of Congress as the basis of the review are closely related to the changes of the demands of the national interests of the UnitedStates in different historical periods.It reflects the value orientation of the United States towards foreign investment.It also represents the true intention of the United States to regulate foreign investment around the national interests.The review body--the Committee on Foreign Investment heightened the status,optimized membership and expanded the power--is the optimizing choice for the United States.It is not only provides a strong guarantee for the professional and comprehensive review of foreign investment in the United States,but also is an inevitable choice to safeguard the national interests of the United States.The national interest standard of U.S.foreign investment national security review is clear.It is not only an important legal means to prevent foreign investment from damaging U.S.national security,but also an important platform for us to realize its national interest demands.The status on consistency and confliction between foreign investment and U.S.national interests determine the realistic position of U.S.in the security review of foreign investment.It is possible to maximize the national interests of the United States by seeking the balance between open investments and maintaining national security in the review.To achieve this goal,the United States set up a “double” submission mechanism through combining voluntary statements with a declaration and applying a “double-layer” standard.Also,the process of screening foreign investment combines subject identity with “controlling”,and using a variety of methods to deal with the examination applications submitted by trade parties.In the national security risk assessment,the United States adheres to the comprehensive assessment of the national security risks of foreign investment.On the one hand,it expands the legal national security considerations and integrates the appropriate nonlegal factors.On the other hand,it analyzes the possibility of foreign investment causing the risk of U.S.relying on other countries,technology spillover and penetration on a case basis.If there may occur national security risks in foreign investment,the United States will apply indirectly veto the investment,and will choose to conduct active consultation with the trade parties to find measures to mitigate the risk,and will approve the investment after the risk is controllable,unless the national security risk presented by the investment that cannot be mitigated or the trade parties voluntarily give up the investment.While the flexible review in the United States will help to achieve the objectives of open investment and national security,it is also likely tolead to a high risk of review and make foreign investors lose confidence in the consistent open and free investment environment in the United States.Therefore,the United States jointly ensures the suitability and prevention of review by setting up a “two-pronged” relief mechanism--congressional supervision and judicial review--to avoid the abuse of power against the legitimate rights and interests of foreign investor.This mechanism not only ensures the flexibility of national security review to create conditions for the maximization of national interests,but also prevents the reverse derogation of U.S.national interests from improper review by safeguarding the rights and interests of foreign investors,which is the concrete embodiment of the realistic nature of U.S.national security review.The operation of the U.S.national security review of foreign investment depends on the domestic and international environment.It also relies on the domestic system and international political and economic changes in the United States.The U.S.security review of foreign investment is rooted in political,economic and social system and is affected by its feral-state and nation-society operation mechanisms.The changes of state market,state society and the relationship between the review departments all have impact on the review process,involving many subjects and interests.These interests includes party politics,interest groups,business competition,news media,and among others.On the other side,the international factors mainly focus on the transformation of the international system,and the role of changes in world economic development on review that includes the transfer of power in the international system,changes in the interaction between countries,economic globalization,global economic imbalances,and so on.These domestic and international factors directly influence the review by lobby activities related review subjects,guiding public opinion,hyping review topics;or indirectly play a role through the adjustment of U.S.global strategy,foreign policy,economic and trade relations.The effects include changing the review function positioning,object identification standard,risk assessment and identification,legal time limit,strength and scale,emphasis and tendency and other aspects,and the influencing factors will affect each other and restrict each other.The decision of the review depends on the comprehensive effect of various factors,which not only leads to the high uncertainty of the U.S.national security review but also acts an important reason for the vulnerability ofChinese investment in the United States.The United States has always been one of the main destinations of Chinese foreign direct investment.Chinese investment has the features like huge amount in the United States,high sensitivity in investment fields,state-owned enterprises as the main investors,and M & A as the main investment mode are the main reasons.These features explain why Chinese investment is more likely to trigger the national security review of the United States.Of course,this is also related to the continuous tightening of the U.S.national security of foreign investment through the revision of relevant legislation.It is closely related to scrutiny and over sensitivity to Chinese investment.To effectively improve the success rate of Chinese investment in the United States and prevent the loss of overseas investment interests,China should jointly deal with the risk of U.S.national security review from both the corporate and the national levels.Before investing in the United States,Chinese enterprises should be familiar with the core risks and operating rules of the U.S.national security review,and formulate reasonable investment strategies and plans.As long as the review triggered,Chinese enterprises should be good at using the existing mechanism of the review and conducting targeted lobbying for relevant subjects,and improving the passing rate of the review.At the same time,the nature of the administrative activities of the national security review determines that relying on Chinese enterprises alone is not enough to solve the dilemma of frequency in U.S.security review of Chinese investment.The Chinese government should establish and improve the risk early warning mechanism of the national security review,speed up the negotiation of bilateral investment agreements between China and the United States,and promote the strategic mutual trust between two countries.These approaches will escort Chinese enterprises to the United States as high as possible,and avoid Chinese overseas investment interests being damaged by the improper U.S.national security review.The negative effects of foreign investment on the national security for the host country provide necessary reason for the host country to carry out the national security review of foreign investment.In this way,the United States has indeed achieved the goal of safeguarding its national security and national interests through implementation of thenational security review of foreign investment.However,the United States practices and violates various principles of international investment law.For example,the U.S.requires the Ministry of Commerce to submit reports on Chinese investment,marks China as a “country of special concern” by setting up an “excepted foreign state”,violates the principle of nondiscrimination,fails to disclose the review process to the trade parties,and violates the principle of transparency to made review decision.The President's action and regulation are waivers to judicial review that violates the principle of accountability.These practices not only greatly increase the risk of national security review of Chinese investment in the United States and add the possibility of damage to Chinese overseas investment interests,but also harm the healthy development of bilateral investment relations between China and the United States and may even have an adverse impact on the world investment pattern and the development of global political and economy.Therefore,the “panoramic” study of the U.S.national security review can provide practical countermeasures and suggestions to deal with the risks of the national security review for Chinese investment in the United States.On the other hand,it can explore the internal laws and development trends of the national security review of foreign investment through the reflection and summary of the national security review of the United States.This analyzing and discussions will improve the national security review system of China.This is also the value of researches on the U.S.national security review.