While no official statement has been made yet, leaks indicate that the Pentagon may have concerns about Chinese investors being able to pour money into American start- ups in specific niches. The niche that is causing most concern to The Pentagon is Artificial Intelligence. If action is taken on this concern, we may soon see curbs being put into place on Chinese funding for new businesses dealing with AI.
The reason for the anxiety
It appears that there is a security concern behind The Pentagon's anxiety about the Chinese funding. Apparently, experts believe that the algorithms developed by new age AI firms may be utilized by the Chinese for military purposes by making a few tweaks and changes to them. The concern clearly indicates that China is viewed as a possible adversary for the United States. The Pentagon is also said to believe that AI is an area where the U.S. can establish itself as a world leader and ensure a vast gap between its capabilities and those of other world countries and allowing China to fund AI start- ups here defeats that objective. By investing in American AI firms, the Chinese effectively gain access to the technical expertise of American citizens and this is what The Pentagon wants to avoid at all costs.
The Defense Secretary's stance
According to Defense Secretary General Jim Mattis, there is a need to review the company takeovers with extra care because the entity responsible for evaluating these with a security viewpoint is 'outdated'. President Trump has also made it clear that the government is perusing ways to stop China's 'predatory practices'.
Obama's similar stance as President
In what may be a highly unusual occurrence, it appears that, for the first time, President Trump's stance has matched his predecessor Obama's. When he was President, Obama had taken a strong stand against Chinese investment in American companies and even blocked a takeover bid of Axitron, by Chinese. Axitron is a German company specializing in making computer chips. National security reasons were quoted for the prevention of the takeover bid. A committee, CFIUS or committee on foreign investment in U.S., given the mandate to look into such affairs is also being reviewed with a view to making it more robust and effective at identifying such potential threats. Interestingly CFIUS does not disclose its actions to the public, keeping it mostly under wraps which companies and which deals are under scrutiny.