As global economic and geopolitical environments enter a new era, companies need to continuously develop and adjust their coherent global business strategies to secure and further expand business opportunities in all markets while minimizing political and legal risks by ensuring compliance. To assist you with that task, Mayer Brown’s US-China Trade Monthly provides news and insights related to the latest US developments impacting the US-China bilateral trade relationship. In the current issue, we will discuss: (1) the annual report from CFIUS for 2021; (2) information and details around the US/China agreement to audit Chinese companies listed on US exchanges; and (3) an overview of recent actions by the US Commerce Department as part of its increased focus on enforcing export restrictions that target China.

CFIUS Reports Record Year in 2021, Including an Increased Focus on China

In August, the Committee on Foreign Investment in the United States (“CFIUS”) released its annual report for the 2021 calendar year. The report summarizes the number of filings submitted to CFIUS and investigations conducted by the Committee in the relevant calendar year, filtered through various criteria, including countries and industries involved.

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US and China Reach Agreement to Audit Chinese Companies Listed on US Exchanges

On August 26, the Public Company Accountability Board (“PCAOB”), the China Securities Regulatory Commission, and the Ministry of Finance of the People’s Republic of China signed a Statement of Protocol Agreement (“Protocol Agreement”) that provides a framework for the PCAOB to investigate and inspect PCAOB-registered public accounting firms in China and Hong Kong. The deal is potentially the first step in bringing PCAOB-registered public accounting firms in China and Hong Kong into compliance with US law, and preventing the delisting companies listed on US exchanges under the Holding Foreign Companies Accountable Act of 2020 (“HFCAA”) for employing such firms to conduct their audits.

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Recent Actions by Commerce Department Reiterates Increased Enforcement of Export Restrictions on China

Late this August, the U.S. Department of Commerce took steps to restrict certain artificial intelligence computer chips from export or reexport to China, and added seven entities to the Bureau of Industry & Security (“BIS”) Entity List. Both actions reflect Commerce’s continued increased focus on enforcing export restrictions that target China.

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