US-China relations: ‘vague’ investment screening plan leaves questions on scope and execution
- The America Competes Act of 2022 contains a proposal for a new outbound review process that would screen investments in offshore supply chains, notably in China
- Though there is bipartisan political support for the investment regime, it is not yet clear what shape it will take or how it will impact US firms in China, say experts
Tension with China is propelling the creation of a new outbound investment screening regime in the United States, but significant uncertainty remains about how it will be implemented, analysts say.
Analysts have mixed views on whether the new screening regime will be passed by Congress this year, but with national security concerns at the top of the agenda in Washington, there is support from across the political divide.
“Given that being tough on China is the only bipartisan issue right now, I fully expect the new screening regime to be put into place,” said Taylor Loeb, an analyst at Trivium China.
The US wants to diversify supply chains away from China, or at least develop backups
“The US wants to diversify supply chains away from China, or at least develop backups. The screening regime is, at its core, designed to do exactly that.”