Applications from Chinese investors seeking regulatory clearance for stakes in US companies more than doubled last year, amid ongoing tensions between the two nations.

Chinese investors made 44 filings for deal approvals, according to a Treasury Department’s annual report for the Committee on Foreign Investment in the United States (CFIUS), more than double the 17 applications in 2020. The country accounts for the largest share of such filings at 16.5 percent, followed by Canada (10.3 percent) and Japan (9.6 percent). 

Unlike 2020, the 2021 figures include filings from Hong Kong-based investors due to a shift in US policy.

Overall, CFIUS reviewed 272 filings, which it calls «covered notices», up from 187 in 2020 and 236 in 2019. The proposed transactions are most concentrated in finance, information and services and manufacturing.

Tightening Environment

Foreign investors seeking to take even a non-controlling stake in US companies must seek approval from the Treasury-led CFIUS which has the power to block transactions over national security concerns. 

Although the added filings is partly attributable to withdrawals and refillings, the sharp increase in Chinese applications is still nonetheless a surprise as demand rose despite growing concerns about US-China relations. 

Still, there was significantly less interest from Chinese investors in critical sectors in 2021, after accounting for one-fifth of the total investments in critical tech during the 2016-2017 period prior to the introduction of a new law in 2018 that expanded the scope of transaction types that require filings and reviews.