WASHINGTON -- Debate is heating up here over a proposed expansion of the U.S. government's economic powers to review corporate investments not only in America, but also in other countries, like China and Russia.

The mechanism has been called a reverse version of the Committee on Foreign Investment in the United States (CFIUS), an interagency body that reviews inbound investments and can recommend that the president block transactions seen as potential security threats.

It could be included in bipartisan legislation aimed at bolstering America's ability to compete with China, now working its way through Congress. The Senate and the House of Representatives began in May the process of reconciling their versions of the legislation, headlined by $52 billion investment in domestic chipmaking -- one of President Joe Biden's signature proposals.

The House bill would require advance notice of plans to transfer production or development to countries or entities "of concern," such as China and Russia. The president could order companies to rework or scrap transactions considered to pose an "unacceptable risk" to "national critical capabilities."

This could have a big impact on business in China, a frequent investment destination for tech and auto companies like Tesla, which has a factory in Shanghai.

Transactions involving advanced technologies and crucial products, such as semiconductors, pharmaceuticals and artificial intelligence, may be subject to review. Foreign companies that do business in the U.S. may also be affected.

While the U.S. has already imposed a range of restrictions aimed at preventing technology leaks, critics say more needs to be done. The jurisdiction of CFIUS was expanded in 2018, and new restrictions have been placed on exports of emerging technologies, but these measures have failed to put to rest fears of American technology being used to strengthen the Chinese military.

Meanwhile, the coronavirus pandemic and Russia's invasion of Ukraine have hammered home the risks of supply chains that rely too heavily on specific countries.

The idea of outbound investment reviews has the backing of the Biden administration. "I support it and the president supports it," Commerce Secretary Gina Raimondo told Nikkei on June 1.

The proposal faces strong opposition from the American business community, which would face new barriers to overseas investment. Of the $243 billion in foreign direct investment in China by American companies from 2000 to 2019, 45% was in industries that could be subject to review, according to the U.S.-based Rhodium Group.

Business groups are lobbying hard to have the bill altered or scrapped. The Information Technology Industry Council wrote in May to involved lawmakers in both the Democratic and Republican parties, arguing that the proposed review mechanism "may ultimately undermine the goal of policymakers to enhance U.S. economic competitiveness and national security."

Democratic Sen. Bob Casey, one of the letter's addressees, was a lead sponsor of the legislation that originally proposed the screening mechanism.

"We want to make sure that we're not going to allow another country to take advantage of our technology or our innovation, disadvantage either our workers, our companies or our national security," Casey said on June 1. "So I sure hope by the end of the conference, they'll reach a point where we'll have that kind of outbound review."

The Treasury Department has proposed a pilot program that would impose a notification requirement just for transactions involving sensitive technologies.

"Given the bipartisan support for some type of outbound screening, there is a good chance that something gets passed eventually," said Christian Davis, a partner at the law firm of Aiken Gump Strauss Hauer & Feld.

"It's possible something is included in the [reconciled legislation] through the conference process," Davis said. "Another option is that a bill gets included in a different piece of legislation."

The Biden administration wants the China competition bill to pass this summer. If Congress takes too long, the White House may ultimately act on its own. An executive order is under consideration, according to a government source, though the idea is not universally supported.

"In terms of how you handle the concern [about leaks], it's through export control tools, not through screening," a senior official said.