Why Is U.S. Policy Tough On Huawei And TikTok But Not Lenovo?
While the media focuses on U.S. policy restricting Huawei, the Chinese-military backed provider of telecommunications equipment, the company is not the only security threat from China. Data—what, how, and where it is generated, processed, and stored—is arguably the greater concern. While federal policy has long recognized the importance of data, implementing up to date data protection is always a work in progress. The bipartisan Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) increased the resources and responsibility of CFIUS (Committee on Foreign Investment in the United States), the body comprised of nine cabinet-level Executive Branch agencies charged with reviewing the national security aspects of foreign direct investment. As I describe in a new whitepaper co-authored the bill’s architect Congressman Robert Pittenger, CFIUS has stepped up to protect Americans’ information privacy and security. With FIRRMA, Congress requires foreign investment in strategic U.S. businesses to be reviewed for its cybersecurity and privacy implications. The CFIUS of the past approved multiple acquisitions of strategic U.S. technology by companies owned by Chinese government, including Lenovo, which through its U.S. acquisitions, has become a leading collector of U.S. data, which is now at risk to purview by the Chinese government. Congress has ensured that the CFIUS of today does not make the same mistakes and has already blocked or unwound mergers that threaten Americans’ data privacy and security.
The Bureau of Economic Analysis reports that more than two-thirds of the total foreign investment in the U.S. comes from European investors; perhaps less than 5 percent of foreign investment comes from investors from adversarial states. As such, the jurisdiction of CFIUS is necessarily and appropriately limited. However in recent years, Chinese investment in the U.S. has increased significantly, driven in part by China’s strategy of techno-nationalism, including acquiring top foreign brands and shaping them into Chinese players. Hence China’s interest in assets from IBM, Motorola, and other U.S. firms.