A new report issued by a U.S.-China Economic and Security review panel recommending against state-owned business purchases of U.S. companies raises political risk for cross-border China-U.S. megamergers in light of the incoming Trump Administration's negative view of globalization.

Specifically, the U.S.-China Economic Review Commission, a congressionally chartered panel, issued its annual report Wednesday, including a recommendation urging lawmakers to approve legislation to authorize the Committee on Foreign Investment in the U.S., or Cfius, to bar Chinese state-owned companies from acquiring U.S. businesses. Cfius is an interagency panel of regulators that reviews foreign acquisitions of U.S. assets for national security purposes.

The report raised concerns about the wisdom of permitting unrestrained investment by economic, and possibly military, opponents and said there was "inherently high risk ... whenever [a state-owned enterprise] acquires or gains effective control of a U.S. company."

The report said that a state-owned company will "use the technology, intelligence and market power it gains in the service of the Chinese state to the detriment of U.S. national security."

And analysts contend that the report raises concerns that at the very least China Oceanwide Holdings' $2.7 billion acquisition of Richmond, Va.-based Genworth Financial (GNW) - Get Report , a life and mortgage insurer, will face a lengthier national security review. Genworth CEO Thomas McInerney told analysts on Nov. 7 that the two companies will begin their review process with Cfius in the "coming weeks."

The U.S.-China panel's reports in years past haven't been very influential, particularly with the Obama Administration. The report isn't legally binding. However, Isaac Boltansky, analyst at Compass Point Research & Trading in Washington, said his sense is it "will fortify the incoming Trump Administration's inherently suspicious view of globalization."

In addition, former Missouri Republican Senator Jim Talent, a member of the U.S.-China Economic and Security Council, is reportedly being considered as a top candidate for Defense Secretary. If Talent becomes Defense Secretary he would have an influential role on Cfius, which is chaired by the Treasury Secretary and is made up of the heads of several other agencies, including the Secretary of Defense, Secretary of Commerce, and Secretary of State.

"From a practical perspective, our view is that the Cfius review process will become both lengthier and meaningfully more burdensome during the Trump Administration," Boltansky said.

Boltansky argues that the report and broader political climate poses risk to the China Oceanwide-Genworth deal review process. However, he argued that the report's recommendations seeking to block state-owned company acquisitions of U.S. businesses won't directly impact the Genworth deal because China Oceanwide is privately held. Nevertheless, it is possible that China Oceanwide has some connections with Chinese government officials.

He added that the threshold for regulatory approval of acquisitions in the mortgage finance industry, like that of Genworth, is lower than for deals in other, more geopolitically strategic sectors, such as defense or even semiconductors. For example, Western Digital's (WDC) - Get Report plan to sell a 15% stake to an investment from China's Tsinghua Unisplendour collapsed in February after a Cfius review.

Michael Wessel, a long-serving member of the U.S.-China Commission, told The Deal that he hopes the incoming administration will consider the recommendations, which were completed prior to the November presidential election.

"Based on what I've heard Trump say, I believe he is not satisfied with the existing approach to China, and I am hopeful that outside voices will help provide some guidance," Wessel said.

However, he added that any specific China-U.S. deals already in the pipeline are unlikely to be impacted by the report, because Congress won't write legislation implementing its tougher Cfius review protocols in the next few months. Nevertheless, future deals could get more intense scrutiny and be rejected. Wessel added that one should expect a "much more aggressive scrutiny by Cfius" of U.S.-China deals if one takes Trump at his word.

Wessel added that if there was any trend one can pick up from the reports over the past two or three years, it is that the panel members have had a greater recognition that China has no intention of changing any time soon.

"It seems pretty clear that the track they are on is one they are comfortable with," Wessel said.