National Security Review Encountered By Chinese State-owned Enterprises When Investing In United States

On September 22,2016,Ministry of Commerce of the People's Republic of China(MOFCOM)released China's Outbound direct investment statistical bulletin 2015,which shown that in 2015 Chinese enterprises conducted 579 outbound direct investments amounted to USD54 billion,relating 62 countries(districts),among which 68.5%are direct investment amounted to USD37 billion,and 31.5%are outbound financing amounted to 17 billion,18 industries including manufacturing,information transmission/software and information technology service,mining,culture,and entertainment are related.State-Owned Enterprises(SOEs)are definitely the leader of this Merger&Acquisition(M&A)wave owing to its capital capacity and policy support.But recently the outbound M&A of Chinese enterprises are frustrated frequently.One of the most tricky reason is the national security consideration of the host countries and due to the special background SOEs suffered more than other private enterprises.The study of the national security review system of the host countries,especially the security review system confronted by the SOEs will benefit both the outbound investment and reform of the SOEs.Whereas United States now receives most of Chinese outbound investments and at the same time CFIUS Frustrated many Chinese investments,Based on study of the national security review system of United States,this article will analyse the national security review the SOEs confront when investing abroad and make some advices.Part 1 will introduce the basic concept of national security and the relation of national security and M&A,and then the national security review system of China.Part 2 will introduce the national security review of USA,including the laws and regulations,institutions,procedures and characters.The study on the countries where SOEs place most of their investment will benefit their investments,which also shape the advices.Part 3 is the study of SOEs which include the definition,character of SOEs and the SOEs in China.Most importantly we will discuss why SOEs in China is more likely to be reviewed than other private enterprises.Part 4 specifically analyzes the security review of China's state-owned enterprises in the United States.First of all we will introduce the investments of Chinese enterprises in USA.Then we will conclude the reason why government of US pay more attention to Chinese enterprises and the solutions by analyzing a real case.Part 5 is the advice about how to respond to national security review which will divided into national level and enterprises level.Through the analysis of theory combined with practice,this article dissects the national security review system of US,including its laws,institutions,procedures and characters etc.Then based on the Particularity of Chinese SOEs and the analysis of a typical case,we try to figure out the key points contained in the national security review of US on Chinese SOEs.In the end,we conclude some practical advices.