Chinese firms will place 1 to $2trn in direct
investments around the world over the coming decade, according to a new report.
Chinese direct investment into the United States
is more than doubling annually, with over $5bn in 2010 alone. A report
undertaken by Asia Society’s Center on US-China Relations and the Kissinger
Institute on China and the United States at the Woodrow Wilson International
Center for Scholars provides the most comprehensive study to date of Chinese FDI
(foreign direct investment) in the United States and outlines its enormous
potential to create economic growth. But it warns that the United States may
squander immense opportunities for employment and investment gains through
An American Open Door?: Maximizing the Benefits of Chinese Foreign Direct
However, US Commerce Secretary Gary Locke warned
on Wednesday at the launch of the report that China is backtracking on promises
to make its economy more friendly to foreign companies, pointing to recent
proposals to review and restrict investments in its economy.
The nominee for the post of US ambassador to
said the Bureau of Economic Analysis reports that investors from China have
a total stock of FDI in the United States of about $2.3bn.
"And the report being released today shows Chinese foreign direct investment
to America doubling in each of the last two years. Chinese investors now have
investments in at least 35 of our 50 states, across dozens of industries.
And the big question we’re really getting at today is pretty straightforward: Is
more Chinese FDI in America a good thing?" Secretary Locke said.
The answer is yes he added, noting that there are few industries where the
Chinese or other foreign investors are restricted from investing in America.
"Unfortunately, that is not the case for American companies operating in
China, where they are frequently shut out of entire industries, or they are
forced to give up proprietary information as a condition of operating in China,"
The commerce secretary said American and other
foreign companies, in industries ranging from pharmaceuticals and biotechnology
to entertainment, still lose billions of dollars from counterfeiting and IP
theft in China every year. "To cite just one example, the Business Software
Alliance estimates that nearly 80% of the software used on computers in China is
counterfeit," he said.
|US Secretary of Commerce Gary Locke, Washington DC, May 04, 2011. The Chinese-American who is a former governor of Washington State, has been nominated by President Obama to be the next US ambassador to China.|
According to the study, which uses new
methodology to collect real-time data on Chinese FDI in the US, Chinese
businesses have already established operations and created jobs in at least 35
of the 50 states. Texas has attracted the greatest share of Chinese investment,
followed by New York, Virginia, Illinois, California, Michigan, Oregon,
Delaware, New Jersey and Mississippi.
Contrary to popular fears about China’s growing
economic influence, the study shows that the total value of Chinese foreign
direct investments worldwide was about $230bn in 2009, roughly equivalent to
Denmark’s. By contrast, the total value of US foreign direct investment is
While the report says China’s share of total
direct investment in the United States is now miniscule - - just 0.1% - - it is
accelerating. New data calculated for the study show that in 2010 alone, Chinese
investments in the US totaled $5bn. The report estimates that Chinese firms in
the US have already created more than 10,000 American jobs.
The authors say the report also provides
surprising new details about the kinds of investments the Chinese are making in
the US. “We have data that captures what the Chinese are doing on the ground
right now,” say the authors. For example: how often the investors are
government entities versus private firms; what types of industries are most
often targeted; and how much money is being used to build new businesses rather
than acquire existing companies.
Surging Chinese investment has triggered populist
anxieties in the United States, just as Americans once feared economic
domination by Japan. “Japanese investment in the United States during the
1980’s was as controversial as China’s,” the authors say, “but in the following years, US affiliates of Japanese companies
invested hundreds ofbns of dollars in the United States, and today employ nearly
The report says US review mechanisms are doing an
effective job of protecting vital security interests. But it warns that
continued politicization of the review process will choke off future investment
and cost Americans valuable opportunities for job gains and new streams of tax