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Hours after China’s Vice-Premier He Lifeng spoke with US Treasury Secretary Scott Bessent on Friday, US President Donald Trump signed a memorandum directing a committee under Bessent’s control to curb investments from mainland China, Hong Kong and Macau in critical sectors.
The memorandum, titled “American First Investment Policy”, stated that the US would “use all necessary legal instruments”, including the Committee on Foreign Investment in the United States, to block China-affiliated investments in American “technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.”
An inter-agency committee led by the Treasury Department, CFIUS reviews foreign investments in the US for potential national security risks, and has been strengthened in recent years as US policymakers sought to address threats posed by China.
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Friday’s memorandum said that investment “at all costs is not always in the national interest”, and asserted that China “systematically direct and facilitate investment in United States companies and assets to obtain cutting-edge technologies, intellectual property, and leverage in strategic industries”.
Framing economic security as national security, the order emphasised that China was targeting the “crown jewels” of US technology, food supplies, farmland, minerals, natural resources, ports, and shipping terminals in “diverse ways, both visible and concealed”.
In the order, Trump said that his administration will “protect” American farmland and real estate near “sensitive facilities”, strengthen CFIUS authority over “greenfield” investments and expand the scope of “emerging and foundational” technologies “addressable” by CFIUS.
According to the US Department of Agriculture’s Farm Service Agency, foreign individuals and entities owned approximately 40 million acres of US farm and forest land by the end of 2021, representing over 3 per cent of the country’s privately held land.
China owns 384,000 acres of US agricultural land, accounting for less than 2 per cent of all foreign-owned land in the US. However, the House Select Committee reports a 30 per cent increase in China’s land holdings since 2019.
CFIUS’ authority was expanded in 2018, when concerns about Chinese threats to national security prompted the US Congress to pass legislation that gave the body the power to include non-controlling stakes in its reviews. Previously, the reviews had been limited to controlling stakes.
That change also gave CFIUS more teeth, allowing it to order the undoing of investments, whereas it had previously only made recommendations to the White House, and giving it the authority to undo transactions that had already been completed.
In 2022, then-president Joe Biden directed CFIUS to sharpen its focus on foreign transactions that involve personal data and advanced technologies.
Since then, investment from China in the US has plummeted.
According to a report published by the Rhodium Group in 2023, direct investments by Chinese entities stood at less than US$5 billion in the previous year, down from US$46 billion in 2016.
That move was motivated by “what we’ve learned from the past few years and the administration’s related efforts to address the need for supply resilience of key supply chains, both inside and outside of the defence industrial base”, according to a Biden administration official.
The latest order states that the US will continue to “welcome and encourage passive investments” from foreign entities, including non-controlling stakes with no voting, board, or governance rights, and those that do not grant managerial influence or access to sensitive technologies or information.
Accusing China of “exploiting” American capital to “develop and modernise its military, intelligence, and other security apparatus,” Trump directed the use of “all necessary legal instruments” to deter American investments in China’s military-industrial sector.
“The United States will establish new rules to stop United States companies and investors from investing in industries that advance the [People’s Republic of China] PRC’s national Military-Civil Fusion strategy and stop PRC-affiliated persons from buying up critical American businesses and assets, allowing only those investments that serve American interests”, the order said.
The memorandum also mentions reviewing whether to suspend or terminate the 1984 US-China Income Tax Convention, aiming to reduce incentives for Americans to invest in foreign adversaries.
Under the 1984 agreement, if a person or business pays taxes in one country, their home country will give them a credit for those taxes to avoid double taxation.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.
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