{"id":32930,"date":"2020-11-19T20:29:32","date_gmt":"2020-11-19T20:29:32","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2020\/11\/19\/when-chinas-predatory-investments-go-unnoticed\/"},"modified":"2026-08-07T22:40:28","modified_gmt":"2026-08-07T22:40:28","slug":"when-chinas-predatory-investments-go-unnoticed","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/commentary\/2020\/11\/19\/when-chinas-predatory-investments-go-unnoticed\/","title":{"rendered":"When China\u2019s predatory investments go unnoticed"},"content":{"rendered":"\n

In May, I introduced legislation to temporarily restrict acquisitions of U.S. companies and assets by the People\u2019s Republic of China (H.R. 6706<\/a>). The legislation was largely in response to discussions about so-called predatory investments<\/a> by the Chinese government and China\u2019s propensity to act most aggressively when its enemies are most vulnerable. As soon as tomorrow, yet another American company with sensitive intellectual property may be purchased by individuals with troubling and opaque connections to Chinese officials and even former officials of the Chinese Communist Party, or CCP.<\/p>\n\n\n\n

This is just one example of a disturbing trend that is happening across this nation as companies and Americans continue to struggle amid the COVID-19 pandemic, and a key example for why Congress must pass H.R. 6706.<\/p>\n\n\n\n

In this time of unprecedented financial distress, particularly in the aviation sector, not all companies can survive. Some turn to bankruptcy proceedings or buyers who are interested in distressed and discounted assets \u2014 allowing the buyer at hand to purchase all assets and IP the company owns. While this may seem harmless at face value, it presents an opportunity for buyers with ulterior motives to step in and acquire sensitive IP for pennies on the dollar.<\/p>\n\n\n\n

For a buyer with unlimited funds \u2014 such as an entity supported by the CCP \u2014 this scenario is a dream. And yes, even companies with potential or realized Chinese ties may be approved by the Committee on Foreign Investment in the United States, or CFIUS, to purchase the assets (and sensitive IP) from struggling U.S. companies.<\/p>\n\n\n\n

The White House did reform the CFIUS process<\/a> in 2018 to allow the president to block questionable transactions (via the Foreign Investment Risk Review Modernization Act). However, small transactions continue to slip through the cracks and go unnoticed.<\/p>\n\n\n\n

The latest case of this unfortunate trend is happening as this is written, in a Delaware-based bankruptcy court, to Eclipse Aerospace \u2014 a small aerospace company based in Albuquerque, New Mexico, that employs 65 people.<\/p>\n\n\n\n

The company produces \u201cvery light jets\u201d that are used for intelligence, surveillance and reconnaissance, among other military uses. The U.S. Air Force once considered using the aircraft for ISR or training, which Congress supported<\/a>, and multiple military forces across the world have used the plane for similar roles. The plane also contains sophisticated avionics, engines (originally designed for cruise missiles), and a full authority digital engine control system that all contain sensitive national security design information.<\/p>\n\n\n\n

Currently, the highest bidder for Eclipse Aerospace appears to be Citiking International, a Chinese-backed private equity firm with offices around the world and possible ties to the CCP via the Aviation Industry Corporation of China<\/a>, otherwise known as AVIC. A recent report (which is cited here as a PDF file<\/a> given that Chinese authorities have presumably blocked U.S. access to the website) indicates Citiking would likely relocate Eclipse\u2019s operations to China and acquire Eclipse\u2019s highly sensitive technology and intellectual property in the process \u2014 providing a direct transfer of sensitive IP from the U.S. to the CCP.<\/p>\n\n\n\t