U.S. Aims to Curtail Financial Ties With China

Others say that China has access to plenty of other sources of funding worldwide, and that cutting off access would prevent U.S. companies from benefiting from Chinese innovations.

“Getting the details right on outbound investment screening is easier said than done,” said Rory Murphy, the vice president of government affairs for the U.S.-China Business Council. “These are technical and complicated sectors, and the details are critical.”

He added that his group wanted to “help policymakers thread the needle of achieving their national security objectives while not going too broad and putting U.S. companies at a competitive disadvantage.”

Investment firms including Blackstone, KKR, Sequoia, Carlyle Group, Bain Capital, Silver Lake, General Atlantic and Warburg Pincus all have notable exposure to China. According to tracking by Rhodium Group, a research firm with a focus on China, U.S. investors have been carrying out about 3,000 transactions per year in China, including both foreign direct investment and venture capital deals, with about 500 of those valued at more than $1 million.

Bill Ford, the chief executive of General Atlantic, an investment firm, has expressed his views about possible regulation directly with Commerce Secretary Gina Raimondo, a person familiar with the matter said.

General Atlantic says it has invested nearly $7 billion in China since 2000 with more than 34 portfolio companies in the country. One of its highest-profile investments there, ByteDance, the parent company of TikTok, has found itself in the cross hairs of the debate over how to manage U.S.-Chinese financial ties.

Depending on how it is put into effect, this new tool could fundamentally alter the country’s financial relationship with China, one of America’s largest trading partners but also a primary geopolitical rival.