US Foreign Investment Review Act Passed... "New Security and China ICT Regulation Issues"

KEI "Possibility of US-China Trade Dispute Reignition After COVID-19"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] There are predictions that the US-China trade dispute could reignite following the COVID-19 pandemic. This is because the Foreign Investment Risk Review Modernization Act (FIRRMA) officially came into effect last February, which could lead to Chinese companies' entry into the US advanced technology sector being considered a national security threat.

According to the "Strengthening and Evaluation of China's Investment Regulations in the US Following the Implementation of FIRRMA" published by the Korea Institute for International Economic Policy (KIEP) on the 28th of last month, FIRRMA was officially enacted on February 13.

This law was enacted to expand and strengthen the authority of the Committee on Foreign Investment in the United States (CFIUS) in response to concerns about national security threats arising from Chinese investments in the US, which had spread within the Trump administration and the US Congress.

CFIUS is the agency that reviews the impact of foreign investments on national security and approves such investments.

With the enactment of the law, CFIUS gained the authority to review not only controlling investments, such as mergers and acquisitions (M&A), but also non-controlling investments.

The areas subject to review for non-controlling investments include core technologies, infrastructure, and sensitive personal information (TID).

Senior Researcher Na Suyeop of KIEP stated, "The Trump administration is showing moves to comprehensively apply the concept of national security and strengthen sanctions on Chinese companies' investments related to personal information and software, using FIRRMA as a turning point."

Earlier, on the 6th of last month, US President Donald Trump ordered the withdrawal of Chinese company Shiji Group's (石基信息) investment in the US company StayNTouch on the grounds of national security threats. This was the first measure announced after FIRRMA came into effect.

Researcher Na explained, "The White House did not specify the exact grounds for the withdrawal," but added, "It is presumed that the US government is concerned that StayNTouch's mobile platform allows hotel check-ins, which could enable the collection and leakage of personal information such as accommodation records of high-ranking US officials."

Chinese companies are preparing response strategies to the US's enactment of FIRRMA. In the case of TikTok, the company announced plans to establish a Transparency Center in Los Angeles by next month to renew its corporate image and build its own security enhancement system.

There is also a possibility that the Chinese government will intervene. Researcher Na said, "The US-China trade dispute has unfolded as a 'Tit for Tat' retaliatory strategy," and added, "China is likely to actively respond using various legal and institutional measures against US investment regulations."

This content was produced with the assistance of AI translation services.