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Four years ago, President Xi Jinping’s

government rolled out the Made in

China 2025 strategy to dominate the

global economy with its homegrown

technology. Chinese government-backed

venture capital firms that still wanted to

buy U.S. assets identified health care as

a sector they could invest in without run-

ning afoul of regulators at home.

Cut to 2018, when health and biotech

supplanted real estate and entertain-

ment as the top recipients of Chinese

capital in the U.S., according to a report

commissioned by the U.S.-China Economic and Security

Review Commission. Now, however, investors face pres-

sure from regulators in America. The Committee on

Foreign Investment in the United States, known as CFIUS,

which screens foreign takeovers of domestic assets for

national security risks, has become a lot more stringent

under the Trump administration. At the end of last year it

began vetting even the purchase of minority stakes in crit-

ical technology—including biotechnology.

Even Chinese investors without government backing

have felt a chill since the arrest of Huawei Technologies Co.

executive Meng Wanzhou in December on U.S. bank fraud

charges. Before that, the U.S. blocked Singapore-based

Broadcom Inc.’s $117 billion bid to acquire Qualcomm Inc.,

the San Diego-based chipmaker, over fears that Broadcom’s

cost-cutting would dull the American company’s edge.

Chinese-backed venture capital firms were involved in

five technology deals in the U.S. last year, valued at a

 LAST THING

With Bloomberg Opinion

By Nisha Gopalan

Chinese Biotech Investors

Have Caught a Chill

total of $349 million, according to the

Asia Private Equity Review. That’s down

from nine tech transactions worth

$602.4 million in 2017.

Health-care deals involving Chinese

investors in the U.S., on the other

hand, shot up to 17 last year, worth

$2.8 billion—well above the four valued

at $702.9 million in 2017. Of the seven

biggest venture capital and private

equity funds investing in both the U.S.

and China that raised money in 2018,

according toAPER,fourhavechosen

health care as a target. Chinese biotech firms investing in

U.S. companies are also acquiring clinical and genetic data

on U.S. residents in the process, according to the review

commission’s report, something that may trigger alarm

at CFIUS. Such information could be used to blackmail

Americans, it said.

If CFIUS starts holding up Chinese biotech deals, that

would leave a lot of Chinese money with few places to go,

especially because Europe has grown more concerned with

privacy protections and thus warier about foreign tech

investments. “Many startups in the U.S. that need funding

are getting bypassed by Chinese money,” says Winston Ma,

former North American head of China’s sovereign wealth

fund, because Chinese VCs are cautious about CFIUS hold-

ing up transactions. That’s a problem for U.S. companies

but perhaps a bigger one for China, whose biotech indus-

try remains less than one-10th the size of that of the U.S. 

—Gopalan is a finance columnist for Bloomberg Opinion