(ANTIMEDIA) Washington, D.C. — On the heels of comments made by Defense Secretary Jim Mattis regarding the United States’ diminishing industrial dominance on the world stage, Reuters reported Wednesday that the U.S. appears ready to heavily increase scrutiny of Chinese investment in Silicon Valley.
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Speaking before a Senate hearing on Tuesday, Mattis stated that for decades, the U.S. has enjoyed “uncontested or dominant superiority in every operating domain or realm,” but that “today, every operating domain — outer space, air, sea, undersea, land and cyber-space — is contested.”
The defense secretary added that the regulatory body in charge of tracking foreign investment in U.S. companies is “outdated” and needs to be “updated to deal with today’s situation.”
To that end, on Wednesday, Reuters — citing current and former U.S. officials and an as-of-yet unreleased report from the James Mattis’ Department of Defense — published an exclusive on how the United States government views Chinese capital in Silicon Valley tech companies as a threat to national security.
From that article:
“Of particular concern is China’s interest in fields such as artificial intelligence and machine learning, which have increasingly attracted Chinese capital in recent years. The worry is that cutting-edge technologies developed in the United States could be used by China to bolster its military capabilities and perhaps even push it ahead in strategic industries.”
“The U.S. government is now looking to strengthen the role of the Committee on Foreign Investment in the United States (CFIUS), the inter-agency committee that reviews foreign acquisitions of U.S. companies on national security grounds.”
CFIUS is a nine-member panel headed by the Treasury Department that includes representatives from the departments of State, Justice, Energy, Commerce, Defense, and Homeland Security. The secretive regulatory body does not make a practice of commenting on the decisions it makes on deals.
The unreleased Pentagon report obtained by Reuters claims China is getting around regulations by making business moves that don’t trigger a CFIUS review, such as investing in startups. Current regulations weren’t designed to govern companies that deal in early-stage technology.
That same report suggested the Pentagon itself should create a “critical technologies” list and restrict all Chinese investment in items on that list. Luckily for Mattis and the Pentagon, U.S. Senator John Cornyn just so happens to be drafting legislation that sounds like it would do just that.
Again, from Reuters, which reportedly spoke with an unnamed Cornyn aide:
“The legislation would require CFIUS to heighten scrutiny of buyers hailing from nations identified as potential threats to national security. CFIUS would maintain the list, the aide said, without specifying who would create it.”
“Cornyn’s legislation would not single out specific technologies that would be subject to CFIUS scrutiny. But it would provide a mechanism for the Pentagon to lead that identification effort, with input from the U.S. technology sector, the Commerce Department, and the Energy Department, the aide said.”
It would seem that when “Mad Dog” Mattis stated that CFIUS, currently run by the Treasury Department, should be “updated to deal with today’s situation,” what he really meant was that the regulatory body should be under the direction of the Pentagon.