Media

Key Takeaways

• Both Donald Trump and Joe Biden sought to increase federal scrutiny over U.S. outbound foreign direct investment (FDI) into China and other “countries of concern.” However, their approaches to restricting outbound FDI differed in respect to scope, targeting, and preferred implementing agencies.
• Trump experimented with a narrower, entity-based strategy, leveraging existing statutes to task the Department of Defense (DOD) with identifying companies contributing to China’s “Military-Civil Fusion” (MCF) and having the Treasury Department implement the sanctions.
• Biden expanded Trump’s targeting policies but granted Treasury clearer responsibility for both targeting and restricting investment in entire sectors – notably high-end semiconductors – linked to China’s defense, intelligence, and security apparatus. Biden also aimed to restrict investment in Chinese companies accused of developing, using, and exporting surveillance technology that faciliated human rights abuses.
• A second Trump term would likely build on Biden’s expanded targeting and 2023 Executive Order on outbound investment, but perhaps re-emphasize aggressive curbs on an entity-by-entity basis and renew prominent rhetoric about China’s MCF. A re-elected Trump could also restore the DOD as the initial arbiter of MCF-related targeting, rather than relying on Treasury. A second Biden administration will almost certainly intensify its current regime of sector-based outbound investment controls.