On February 21, the White House issued a presidential memorandum, "'America First' Investment Policy." According to the White House Fact Sheet, the memorandum is a continuation of the many actions Trump has taken during his first term to protect American innovation, including: launching a Section 301 investigation into China's forced technology transfer, unfair licensing and intellectual property policies; announcing the Department of Justice's China Initiative to identify and prosecute trade secret theft, hacking and economic espionage; prioritizing the promotion of American artificial intelligence research and development; and taking action to prevent foreign malicious actors from accessing American information networks.
The memorandum first expressed a welcome for foreign investment, and then pointed out: "China is systematically guiding and promoting investment in the United States through various overt or covert means to obtain cutting-edge technology, intellectual property and influence in strategic industries." The memorandum uses the phrase "economic security is national security" often said by the current Treasury Secretary Bessent, which constitutes the general outline of the entire policy, and further elaborates:
"China will not let American companies control its critical infrastructure, and the United States should not let China interfere with its core assets. Now, Chinese investors are eyeing important resources such as the United States' high-tech, food supply, farmland, minerals, ports, etc., which are the "lifeblood" of the United States. What is more dangerous is that China is using American money to upgrade its military, intelligence and cyber warfare capabilities, which poses a threat to the United States and the US military around the world. Through the "military-civilian integration" policy, they let Chinese companies and research institutions serve the military and expand their military influence. Chinese companies also get a lot of funds from the US market by listing on the US stock market, lobbying fund companies, and attracting investment, which indirectly supports China's military development. In other words, American money is helping the Chinese military become stronger."
1. Welcome investment from allies and partner countries
(1) The purpose of the US investment policy is to develop high-tech such as AI locally. Allies and partners are welcome to invest, but it must be in line with US interests and benefit the American people.
(2) Allies' investment will have a "fast track" to make it easier for them to enter the US high-tech industry, but the premise is that they cannot cooperate with rival countries.
(The Trump administration wants to use the Committee on Foreign Investment (CFIUS) as a more direct foreign policy tool, and explicitly link CFIUS review with bilateral relations with various countries. Investment from countries with good relations with the United States will be subject to less scrutiny, while investment from countries with poor relations with the United States will be subject to stricter scrutiny. This should also accelerate the United States' strategy of building a multilateral alliance for investment review against China)
(3) No longer use those cumbersome and time-consuming "mitigation agreements" to deal with investments from adversary countries. In the future, such agreements will only contain specific requirements that companies can complete within a certain period of time, rather than long-term and expensive regulations. At the same time, the government will focus more on supporting investments from allies and partners.
(This means that Chinese investment in the United States will no longer be able to go through the path of signing a "national security agreement" and implementing mitigation measures, which is equivalent to a "presumption of rejection" of Chinese investment).
(4) "Passive investment" is welcome (including non-controlling shares and shares that will not obtain voting rights, board seats or other corporate governance powers, and will not allow investors to obtain any management influence, important decision-making power or non-public access to technology, technical information, products or services).
(5) Accelerate environmental review of any investment in the United States exceeding US$1 billion. 2. Strictly review investments by foreign adversaries (China (including Hong Kong and Macao), Cuba, Iran, North Korea, Russia, and the Maduro government in Venezuela) to prevent them from touching key U.S. technologies and assets. (1) Strictly review foreign investments in sensitive areas such as core technologies, critical infrastructure, and personal data to ensure that the lifeline of the United States is not controlled by foreign adversaries.
(2) Will use all necessary legal tools, including the Committee on Foreign Investment in the United States (CFIUS), to restrict investments by individuals or entities with ties to China in U.S. technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic industries. The U.S. government will protect U.S. farmland and real estate near sensitive facilities, and will seek (including in consultation with Congress) to strengthen CFIUS’s oversight of “greenfield investments” to limit foreign adversaries’ access to U.S. talent and businesses in sensitive technologies (particularly artificial intelligence), and expand the scope of “emerging and foundational” technologies that CFIUS can control.
(During his first term, Trump significantly strengthened the national security review of the Committee on Foreign Investment in the United States (CFIUS) on Chinese companies' investments in the United States. In August 2018, the Foreign Investment Risk Review Modernization Act (FIRRMA) officially came into effect, expanding the scope of CFIUS's review from traditional M&A transactionsto national security. leaf="">non-controlling minority equity investmentsand real estate transactions involvingsensitive technologies, critical infrastructureorclose to sensitive locations. The United States has adopted astricter and more cautiousattitude towards Chinese investment. A large number of Chinese companies have been forced to withdraw or cancel transactions before submitting for review, and the number of unapproved cases has increased significantly, making it more difficult for Chinese companies to invest in the United States. It now appears that in Trump’s second term, the line between national security and economic security will be further blurred, and CFIUS will continue to be a weapon in the service of geopolitical agendas. The promise of welcoming Chinese companies to invest in the United States may not necessarily hold true). (3) Protecting the funds of American investors and allowing this money to drive the development of the U.S. economy: Strengthen financial supervision to ensure that foreign companies, especially Chinese companies, comply with the strict financial auditing standards of the Foreign Companies Accountability Act when listing in the United States; Review foreign rival companies’ use of variable interest entities and subsidiary structures to list on U.S. exchanges, thereby limiting the ownership rights and protections of American investors, and investigate allegations of fraud by these companies; Manage pension investments and restore the strictest regulatory standards in accordance with the requirements of the Employee Retirement Income Security Act of 1974 to ensure that Americans’ retirement funds do not flow to companies in foreign rival countries.
(In December 2020, at the end of Trump's term, the U.S. Congress passed and Trump signed the Foreign Companies Accountability Act (HFCAA). The law stipulates that if a foreign company listed in the United States does not allow the U.S. Public Company Accounting Oversight Board (PCAOB) to inspect its audit reports for three consecutive years, it will be . Forced delisting. Now it is obvious that they are planning to manipulate this matter again and conduct strict scrutiny on Chinese companies going public in the United States. I wonder if the audit supervision cooperation agreement reached by China and the United States after much difficulty in negotiation during the Biden administration will be overturned again. )
3. Do not allow US investment to support China's military industry
(1) Prevent US funds from flowing into China's military industry. These could include asset freezes or other economic sanctions under the International Emergency Economic Powers Act (IEEPA), such as those issued over the past several years by Presidential Executive Orders (EO 13959, “Targeting the Threat of Securities Investments Financing Chinese Communist Party Military Companies,” which established CMIC; EO 13974, “Amending EO 13959,” EO 14032, “Targeting the Threat of Securities Investments Financing Certain Chinese Companies,” and EO 14105, “Targeting the Threat of Certain U.S. Investments in Security Technologies and Products in Certain Countries,” which established adverse investment reviews. The Administration is currently reviewing EO 14105 in light of the January 20, 2025 Presidential Memorandum (America First Trade Policy) to determine whether it has adequate controls to address national security threats.
(Regarding Executive Orders 13959 and 14032, I have a very clear explanation in the article "Tencent, CATL, etc. are on the blacklist - a brief history of the U.S. "military-related" sanctions list". Regarding Executive Order 14105, please refer to "The United States issued final rules on investment review in China: prohibiting U.S. capital from supporting the design and development of certain artificial intelligence systems by Chinese companies"
text="">On November 12, 2020, Trump issued Executive Order No. 13959, "Countering the Threat of Investment in Securities of "Chinese Military Industrial Enterprises", prohibiting U.S. entities from purchasing or selling publicly traded securities of CCMC companies. On June 3, 2021, Biden issued Executive Order No. 14032, "Countering the Threat Posed by Securities Investments that Provide Funding for Specific Chinese Companies", which amended Executive Order No. 13959 and changed the original list of "Chinese Military Enterprises" (CCMC) that was subject to a securities investment ban to the "List of Non-SDN Chinese Military Industrial Complex Companies, NS-CMIC"U.S. individuals and entities are prohibited from investing in securities of companies on the NS-CMIC list, including buying, selling or holding stocks or bonds of these companies.
(2) Building on the Trump Administration’s measures in 2020 and 2021, consider imposing new or more stringent restrictions on U.S. outbound investment in semiconductors, artificial intelligence, quantum technology, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas related to China’s national military-civilian integration strategy. The controlled areas will be reviewed and updated regularly, including by the Office of Science and Technology Policy. During the review process, the government will consider imposing restrictions on investment types, including private equity, venture capital, greenfield investment, corporate expansion, and investment in listed securities, with funding sources including pension funds, university endowment funds, and other limited partnership investors. It is time for American universities to stop supporting foreign adversaries through investment decisions, just as they should stop opening their resources to supporters of terrorism.
(From this article, the reverse investment review for which the Biden administration has established federal regulations will be comprehensively expanded: first, the scope of technology covered will be expanded: it will no longer be limited to advanced semiconductors, quantum computing, and certain artificial intelligence systems, but will also include biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and "other areas related to China's national military-civilian integration strategy." Second, the types of investments covered will be expanded. Investments in listed securities and investments by Americans as limited partnerships are exempt from the federal regulations on reverse investment review during the Biden era, but the Trump administration has made it clear that they will be included. Such a tough stance on reverse investment review makes people feel that the current administration will focus more on bans rather than notifications in its review methods, and the reverse investment review legislation being promoted by Congress may also gain momentum as a result.)
(3) Review whether the 1984 U.S.-China Income Tax Treaty should be suspended or terminated. The Tax Treaty, together with China’s accession to the WTO and the U.S. commitment to grant China unconditional most-favored-nation treatment, has led to the deindustrialization of the United States and the modernization of Chinese military technology. The Administration will seek to reverse both of these trends. American investors should invest in America’s future, not China’s. The Secretary of the Treasury, in consultation with the Secretaries of State, Defense, Commerce, the U.S. Trade Representative, and other appropriate executive departments and agencies (and in coordination with the members of CFIUS), shall take the necessary actions, including rulemaking and regulations, to support the full authority of the President under IEEPA, section 721 of the Defense Production Act of 1950, as amended, and other law to carry out the purposes of this policy paper.
Regarding the policy of accelerating the environmental review of investments over $1 billion,the Administrator of the Environmental Protection Agency shall consult with the heads of other appropriate agencies to implement it.
Regarding strengthening financial supervision of Chinese companies going public in the United States,the Secretary of the Treasury shall contact the Securities and Exchange Commission and the Public Company Accounting Oversight Board as appropriate.
Regardingstrictly investigating overseas companies’ circumvention of supervision and “circuitous listings,”the Attorney General shall coordinate with the Director of the Federal Bureau of Investigation to provide written advice on the audit status, corporate supervision, and risks posed by suspected criminal or civil fraud of all foreign counterparties currently listed on domestic exchanges. Regarding preventing pension funds from investing in foreign rivals, the Secretary of Labor should publish updated fiduciary duty standards under the Employee Retirement Income Security Act of 1974 to regulate investments in public market securities of foreign rival companies.
Recently, there seem to be more signals of "detente" between China and the United States, such as the potential agreement between China and the United States that is said to be more reliable in the New York Times, and Trump's earlier positive and active statements on DeepSeek and Chinese companies' investment in the United States. So to be honest, seeing this "America First" investment policy that is quite tough on China, it feels that Trump, who was in his first term, is back, and I am still somewhat surprised. Looking at some of the current important personnel appointments at the U.S. Department of Commerce, almost without exception, they are hawks on China, and there is no sign of "detente". We may not be overly optimistic about Trump and the U.S. government, so we should "listen to what he says and watch what he does."
Catherine
Weiliang
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Kikyo