Research & Analysis

Recently, the Committee on Foreign Investment in the United States (CFIUS) has been thrust into the limelight with a spate of high-profile deals. An inter-agency committee of the US government, CFIUS has the authority to review, for national security reasons, any transaction that would result in a foreign entity having control of a US asset. CFIUS has the power to investigate, modify or recommend that the president block any transaction for which it judges national security concerns cannot be mitigated.

The recent two sessions of China’s legislature and advisory bodies were resplendent with “core of the core” choreography ensuring everybody was in lock-step with President Xi Jinping, the leader of the Chinese Communist Party, and with the party, the authority on government entities and action. On the policy side, the prevailing narrative was to slow-walk reforms while fast-tracking state-led entrepreneurship and top-shelf technology acquisition.

Forecasting the financial performance of a proposed business and accurately assessing the investment required to launch operations is always a complex affair. In China, where foreign currency restrictions significantly complicate cross-border transactions, the strategic planning of funding foreign-invested entities (FIEs) is of particular importance.

Combined Chinese direct investment in the advanced economies of North America and Europe more than doubled in 2016 to a record $94.2 billion as China continued its transition to a new growth model, in line with its rapidly maturing economy.

China’s State Council has issued a circular of the government’s intentions to further open the economy and boost foreign investment. The circular is part of the effort to build China’s so-called “new open economic system,” with measures focused on streamlining government administration, improving regulations, and reducing institutional transaction costs to create a favorable business environment for foreign investment.

China’s ranking on Transparency International’s (TI) 2016 Corruption Perception Index (CPI) continues to improve, moving up four places to 79. The latest CPI is a reminder for companies that rely on its rankings to review their global compliance programs and make regional adjustments. Companies should pay attention to those countries and regions that have dropped significantly in the their rankings and scores, and identify compliance risks that were previously undetected.