Is Buyout Bid of Starwood from Chinese Group a National Security Threat?

Could the growing number of Chinese companies acquiring U.S.  firms  pose a threat to the security of the United States?  Rep. Robert Pittenger, (R-NC), weighed in on concerns over the security risks as well as the economic benefits of these acquisitions.

“I think Chinese investments overall are healthy.  Our concern is relative to national security interests, we have Chinese investments in North and South Carolina,” Rep. Pittenger told the FOX Business Network’s Maria Bartiromo.

“The Keer Group, a Chinese company, has acquired a textile firm just right across the border from Charlotte, it creates jobs.  Smithfield Ham, which will be in my new district, they are [also] a Chinese firm now.  So we’re not at all displeased with their investments,” he said.

The recent acquisition proposal of Starwood Hotels (NYSE:HOT) by China’s Anbang has raised unique national security concerns in the hotel industry over the possibility of wiretapping rooms in an effort to get national secrets.

“I think it’s something that warrants some oversight.  Certainly ought to be swept if a head of state is going to go in there, those are security matters that I think need some prudent advisory role in it.  But our concern really, relative to the Chicago Stock Exchange, is that you have the Casin company which has Chinese government ownership and they would be acquiring this company.  They are very opaque, we don’t know much about them, and that’s the nature of the Chinese,” Rep. Pittenger said.

Rep. Pittenger  continued, “Of course the [Chinese] government itself has been involved in currency manipulation, cyber war and corporate espionage and for all these reasons we think it’s prudent that CFIUS (Committee on Foreign Investment in the United States)  get a strong look at what the objectives are and what the concerns may be.”

He further explained the role of CFIUS in protecting U.S. national security interests.

“Their overall objective is to seek out any acquisition that may have a national security intent and certainly the acquisition of the Chicago Stock Exchange, we feel like could play a role in that.  That is why we want a robust review.”

Rep. Pittenger then weighed in on past efforts by China to acquire U.S. companies that have raised red flags.

“In terms of what we want to acquire, I don’t think there are restrictions on what an American company can acquire.  But we have restricted China from acquiring Western Digital, Fairchild, as these are semiconductor firms, and that’s a very important component for our military equipment.”