The approval by a US national security watchdog for China National Chemical Corp's proposed takeover of seed and pesticide maker Syngenta AG is a significant development for Chinese investment in the US, according to observers.

The Committee on Foreign Investment in the United States, or CFIUS, cleared the $43 billion acquisition of Syngenta by China National Chemical, known as ChemChina, the companies announced Monday. The deal still faces an antitrust review from regulators in the European Union. ChemChina and Syngenta said they expect it to close at the end of the year.

"This is a good signal for Chinese foreign direct investment (FDI) in the US," said Charles Skuba, professor of international business at Georgetown University.

Skuba also said this could help boost the chances for a bilateral investment treaty (BIT) between China and the US. "It would be in China's interest to reduce the sectors in its economy that remain restricted to foreign investment like financial services, agriculture and cloud computing to show that US investment is also welcome."

Even though Syngenta is based in Switzerland, a CFIUS review was warranted because the company is the biggest seller of pesticides in North America from where it gets nearly a quarter of its revenue. It has facilities in North Carolina.

In March, a group of farm-state US senators called on the Treasury Department to review the transaction on concerns that Chinese control could affect US food security and farm interests as ChemChina is State-owned.

The CFIUS approval "demonstrates that, although the CFIUS process may take some time and deliberate consideration, if a corporation has a properly developed plan and the right presentation to the government, it can succeed. The US government understands the importance of foreign investment and through the CFIUS process, is able to balance that priority with national security concerns," Chris Griner, the chair of Stroock, Stroock & Lavan LLP's CFIUS practice, said in a statement.

"The CFIUS approval removes a major potential hurdle and should come as a relief to Syngenta shareholders," said Christian Faitz, co-head of chemicals research at brokerage Kepler Cheuvreux, in a Wall Street Journal article.

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