ANNUAL REPORT

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62 Table 4: Notable Chinese Bids and Acquisitions of U.S. Companies, 2015–2016—Continued Chinese Buyer Uphill Investment Co. (Chinese consortium) Dalian Wanda Beijing E-Town Dragon Semiconductor Industry Investment Center Haier Group Anbang Chongqing Casin Enterprise Group U.S. Target Integrated Silicon Solution, Inc. Legendary Entertainment Mattson Technology General Electric home appliances unit Fidelity & Guaranty Life Chicago Stock Exchange Price (US$ billions) $0.74 $3.5 $0.30 $5.6 $1.57 n/a Tianjin Tianhai Ingram Micro $6.0 Anbang Humanwell Healthcare, PuraCap Pharmaceutical Zhongwang USA LLC Source: Various. 203 Blackstone Group Strategic Hotels & Resorts Inc. $6.5 Epic Pharma $0.55 Aleris Corp. $2.3 Status Deal closed, Dec. 2015 Deal closed, Mar. 2016 Deal closed, May 2016 Deal closed, Jun. 2016 Pending, agreed to acquire Nov. 2015 Pending, agreed to acquire Feb. 2016 Pending, agreed to acquire Feb. 2016 Pending, agreed to acquire Mar. 2016 Pending, agreed to acquire Mar. 2016 Pending, agreed to acquire Aug. 2016 Industry Semiconductors Entertainment Semiconductors Home appliances Financial services Financial services Electronics & IT Real estate Pharmaceuticals Aluminum According to research from Rhodium Group, private Chinese companies accounted for 84 percent of total Chinese FDI in the United States in 2015, up from 19 percent five years ago, as investments by Chinese state-owned firms fell sharply.* (For more on the thin line between Chinese state-owned companies and private companies, see * Rhodium Group defines private companies as companies with less than 20 percent government ownership. Thilo Hanemann and Cassie Gao, “Chinese FDI in the US: 2015 Recap,” Rhodium Group, January 19, 2016; Thilo Hanemann and Adam Lysenko, “Chinese FDI in the United States: Q1 2013 Update,” Rhodium Group, April 30, 2013.
63 Chapter 1, Section 2, “State-Owned Enterprises, Overcapacity, and China’s Market Economy Status.”) Mergers and acquisitions (M&A) remained the dominant form of FDI flows that year, with Chinese companies completing over 100 M&A deals worth $13.5 billion. 204 The trend of growing Chinese FDI in the United States reflects a broader shift in China’s outbound FDI away from natural resource extraction and energy in developing countries toward a broader range of industries in high-income economies, such as Europe and the United States. 205 The sectoral composition of Chinese investment in the United States has become much more diverse. 206 In 2015, the biggest industries were real estate and financial services, followed by ICT, energy, automotive, health and biotechnology, and entertainment. About two-thirds of total investment went into services, up from 14 percent in 2009. 207 The top three destinations for Chinese FDI were New York (led by investments in the financial services and real estate sectors), California (ICT and real estate), and Texas (energy). 208 The increased acquisition of U.S. assets by Chinese companies has led to growing political concern over the national security risks of such acquisitions. 209 Chinese firms, which often receive state funding, have been particularly active in bidding for U.S. technology assets. For example, technology distributor Ingram Micro announced in February 2016 that it was being sold to Tianjin Tianhai Investment for $6 billion. 210 While many analysts anticipate the sale will go forward without a Committee on Foreign Investment in the United States (CFIUS) review, a few attempted Chinese acquisitions of U.S. technology firms have recently fallen apart as a result of CFI- US scrutiny or even just its likelihood. 211 In February, hard disk drive manufacturer Western Digital’s sale to China’s Unisplendor collapsed after CFIUS announced it would review the deal, and the sale of the lighting division of Dutch electronics firm Royal Philips was purportedly blocked by CFIUS. 212 Fairchild Semiconductor, another electronics firm, rejected a bid from a Chinese buyer in February for fear the acquisition would trigger a CFIUS review. 213 In another example, the acquisition of insurance company Ironshore by Chinese conglomerate Fosun International came under CFIUS review after the deal closed in November 2015.* Media reports indicate the purchase drew CFIUS’s interest because an Ironshore subsidiary, Wright USA, is a key provider of legal liability insurance for U.S. intelligence officials. 214 Overall, the data do not demonstrate that CFIUS has been a significant obstacle for Chinese investment in the United States. In 2014, the latest year for which data are available, China led foreign countries in CFIUS reviews with 24 reviewed transactions out of more than 100 total Chinese acquisition deals. 215 Although the number of Chinese transactions reviewed increased in absolute terms, it declined as a share of all Chinese acquisitions, and the vast majority of reviewed transactions proceed. As a percentage of total * News of the CFIUS review first broke in June 2016. Fosun issued a statement that it and Ironshore had voluntarily notified CFIUS of the acquisition and both parties “have been working closely with CFIUS.” Ironshore stated in a July 2016 filing for a U.S. initial public offering that it expects the results of the CFIUS review before its registration statement becomes effective. Josh Beckerman, “Fosun Group Insurance Unit Ironshore Inc. Files for IPO in U.S.,” Wall Street Journal, July 22, 2016; Fosun, “Fosun’s Statement,” June 4, 2016. www.fosun.com/language/ en/p/8473.html.
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USCC 2016 ANNUAL REPORT
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1 2016 REPORT TO CONGRESS of the U.
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U.S.-CHINA ECONOMIC AND SECURITY RE
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• The safety of food, drug, and o
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CONTENTS Page TRANSMITTAL LETTER TO
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IX Page Recommendations ...........
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dkrause on DSKHT7XVN1PROD with USCC
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123 Addendum I: Section 15 of China
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125 Addendum II: AD and CVD Investi
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141 dkrause on DSKHT7XVN1PROD with
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143 lifetime cost of bringing the e
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145 gets achieved). 57 Using satell
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147 cost of compliance,’’ and p
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151 boost the efficiency of China
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Table 1: 157 Chinese Attempted and
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Table 1: 159 Chinese Attempted and
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163 Figure 4: China’s Total Debt-
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173 weapons, opens the U.S. militar
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175 ests, and allow for greater vol
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177 Addendum I: Key Targets in Chin
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179 Addendum I: Key Targets in Chin
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195 The ultimate impact of the ruli
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197 Environmental Impact of China
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201 China’s Maritime Disputes in
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203 Reform and Reorganization of th
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207 • PLA Army Headquarters: Chin
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221 Space-Tracking Facility in Arge
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223 Table 1: Significant PLA Bilate
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227 Nigeria will be the first expor
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231 tional annexes to the 2014 Noti
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233 Select U.S.-China Security-Rela
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257 China’s Core Interests—Cont
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259 guerrillas in Colombia and held
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271 stan. 109 In 2014, the PLA Air
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279 RECOMMENDATIONS Developments in
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SECTION 3: CHINESE INTELLIGENCE SER
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291 Strategic Support Force In Dece
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293 of advanced intelligence, surve
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295 tives, and sexual entrapment. 4
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297 information to a Chinese intell
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299 such as power transmission grid
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301 for transferring trade secrets
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303 nal U.S. discussions of issues
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305 ENDNOTES FOR SECTION 3 1. U.S.-
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307 29. U.S. Department of Justice,
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309 63. U.S. Department of Justice,
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311 106. Eric Holder, “Attorney G
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314 sure its own ambitions in South
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316 Chinese foreign direct investme
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318 • Pakistan: In 2015, China an
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320 India “Acts East” and Puts
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322 Counter Terrorism and Religious
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324 tivities of the Dalai Lama and
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328 conducive to sea lane protectio
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330 Karachi Port, that could eventu
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332 India and OBOR India has not en
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336 For China, the goals of CPEC ar
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338 according to Mr. Small, “The
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340 side the Treaty on the Non-Prol
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342 Facets of U.S.-India Defense Re
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344 of China, but has advocated for
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346 • Recent U.S.-China tensions
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348 24. Debasish Roy Chowdhury, “
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350 71. Jeff Smith, Cold Peace: Chi
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352 127. U.S.-China Economic and Se
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354 2016, 86; Andrew Small, The Chi
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364 agreements. 57 Since then, many
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366 $67.2 billion, comprising 25.4
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368 Foreign Direct Investment China
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374 Taiwan and the 11-Dash Line The
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420 Hong Kong and the ‘‘Panama
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424 Table 1: Select PLA Hong Kong G
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442 Korea. The resolution also bans
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APPENDIX II BACKGROUND OF COMMISSIO
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APPENDIX III PUBLIC HEARINGS OF THE
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537 June 9, 2016: Public Hearing on
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APPENDIX IIIA LIST OF WITNESSES TES
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541 Alphabetical Listing of Panelis
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APPENDIX IV LIST OF RESEARCH MATERI
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547 China’s Military Agreements w
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APPENDIX V ACRONYMS AND ABBREVIATIO
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551 OPM PBOC PLA PMI PPI PPP PRC QD
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553 2016 COMMISSION STAFF MICHAEL R
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