China's FDI to help US growth

08:17, May 06, 2011      

Email | Print | Subscribe | Comments | Forum 

Political fear-mongering about Chinese direct investment in the United States could cause the US to miss out on employment and investment opportunities, according to US academics.

The warning was spelled out on Wednesday in the form of a recent study on Chinese foreign direct investment (FDI) in the US. Entitled An American Open Door? Maximizing the Benefits of Chinese Foreign Direct Investment, the study shows that increases in China's direct investment in the US in the coming decade will help economic growth and job creation in the country.

Over the past two years, the value of Chinese FDI assets in the US has grown 130 percent annually, said Daniel Rosen, an economist and one of the two authors of the study.

He and economist Thilo Hanemann estimate that in 2010 alone, Chinese investments in the US amounted to $5 billion.

By combining data from professional databases, media reports and industry contacts as well as documenting real-time investments, they show that Chinese firms have opened businesses in at least 35 states and created some 10,000 jobs.

Profitability is the essential motive behind the Chinese investment, Rosen said, adding that Chinese firms are likely to "place some $1 trillion to $2 trillion in direct investments around the world over the coming decade".

Stapleton Roy, former US ambassador to China, said that the study offers "an informed basis for a potential controversy that tends to rise as China shifts its global posture from being a net absorber of FDI to a major provider of FDI, a trend that has begun to emerge in the last few years".

The study has "brought together the best factual bases for understanding both the positive aspects of Chinese FDI in the US and potential risks that exist with FDI in advanced countries", said Roy, who is director of the Kissinger Institute on China and the United States at the Woodrow Wilson International Center for Scholars, which co-sponsored the study with the Asia Society's Center on US-China Relations.

The authors addressed the national security issue that has aroused an outcry, particularly in the US Congress, saying that the US should continue its screening through the Committee on Foreign Investment in the US (CFIUS), a group headed by the Treasury department with members coming from the defense and intelligence departments.

While Rosen defended CFIUS' role, he did admit that Huawei Technologies Co Ltd's continued failure in major mergers and acquisitions in the US along with other much publicized cases has "already planted seeds of mistrust among Chinese entrepreneurs and Chinese firms that are considering operating in the US or Germany or Canada and someplace else".

The flow of investment from China to the US constitutes "one of the fundamental changes in US-China relations", said Orville Schell, director of the Asia Society's Center on US-China Relations.

Schell said the US "will suffer" if it cannot find ways to "be as open to Chinese capital as we are to other firms", even when national security issues considered.

"We are not investing in China in order to subvert China; China does not, by and large, invest in the US for reasons other than profits," Roy said. "We would be damaging the US national interest to adopt policies that cause Chinese investment to flow to other countries where they would be prefer and find better profitability than in the US."

Source: China Daily
BRICS Leaders Meeting 2011
Japan in aftershocks
  Weekly review  
April 23   Pictures catch ancient & cultural heritage of a Sichuan town
April 28   Will China's rise lead to the decline of U.S.?
April 25   Kunming-Singapore High-Speed Railway begins construction
April 25   Chinese path -- a marvel of world's economic growth
April 23   The week in pictures
April 26   Second excavation to sunken 'Nan'ao No 1' finished
April 27   Guizhou girl designs tea set for Prince William's wedding
April 26   PLA reserve force Type 07 uniform makes debut in Beijing
April 28   Old friends eye for new & higher levels of cooperation
April 29   Shanghai auto show closes


  • Do you have anything to say?


Special Coverage
  • Al-Qaeda leader Osama bin Laden dead
  • BRICS Leaders' Meeting 2011
Major headlines
Editor's Pick
  • Where does NATO's "boundary" lie?
  • Water level of Po Yang Lake keeps low
  • Argentine former president Carlos Menem divorces
  • Beautiful scenery in Taiwan's Tainan City
  • Gold bars featuring Xi'an Horticultural Expo released
  • Obama extends best wishes to British newlywed royal couple
Hot Forum Dicussion