Sen. John Cornyn (R-TX). Photo by Al Drago/Getty Images

The Senate Banking Committee today will hear testimony on proposed changes to the review process for acquisitions and other foreign investments in U.S. companies.

Why it matters: This is nominally about any foreign investment in the U.S., but it's really about worries that China is stealthily acquiring U.S. technological secrets.

Sen. John Cornyn (R-TX) is the legislation's lead author, and will testify today. Co-sponsors include four Democratic senators and six Republican senators. In other words, bipartisanship on the (possible) eve of a partisan government shutdown.

Cornyn's bill primarily centers around concerns that China is using joint venture and minority investment structures to sidestep review by The Committee on Foreign Investment in the U.S. (CFIUS). Basically, the goal would be to expand jurisdiction.

  • Related: CFIUS just approved its first Chinese acquisition of a U.S. company in the Trump era, giving the go-ahead to Naura's purchase of Pennsylvania semiconductor company Akrion Systems.

The new legislation would exempt certain transactions from CFIUS review if all the foreign investors are from a U.S. treaty ally that also has a mutual "investment security" agreement.

There are some big questions as to how the bill treats U.S.-based investment funds with foreign limited partners. Among those testifying will be Scott Kupor, managing partner of Andreessen Horowitz and chairman of the National Venture Capital Association. Per Kupor's prepared remarks:

"The legislation does not specifically speak to the common practice of a foreign person that invests in a U.S. venture fund, which in turn invests in a critical technology company. We are concerned that this ambiguity—especially when combined with a broad grant of rulemaking authority to CFIUS—will cause unnecessary confusion, cost, and burden for the venture capital industry, as venture firms will be left without a clear understanding of whether they must file with CFIUS and under what circumstances.”

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