Statistics show perception of Chinese investment in US doesn’t match reality

By Wang Jiamei Source:Global Times Published: 2017/9/13 22:23:40

Chinese capital is not as keen to invest in the US as imagined, official data has shown, pointing to Chinese companies' frustration with US restrictions.

According to the US Department of Commerce's Bureau of Economic Analysis, the UK ranked first with $598.3 billion in terms of foreign direct investment (FDI) in the US in 2016, followed by Canada, Japan, Germany, France, Switzerland, the Netherlands, Singapore, Spain and Ireland.

China was not even able to crack the top 10 with only $58.2 billion, almost five times less than Ireland.

This took place in the same year that China's non-financial outbound direct investment reached $170 billion, up 44.1 percent year-on-year, according to data released by China's Ministry of Commerce in January.

What these two sets of figures show is at odds with the popular view of Chinese investment in the US, mainly because a large number of proposed Chinese investments, especially in high-technology sectors, were subject to review by the Committee on Foreign Investment in the United States (CFIUS), the agency that determines whether a deal will pose a threat to US national security.

While Chinese investment only accounts for a very small part of FDI in the US, nearly one-quarter of CFIUS cases involved Chinese companies.

It is also disturbing to see that the US plans to expand CFIUS reviews of Chinese investment in other so-called sensitive technologies such as artificial intelligence.

The growing scrutiny by US regulators prompted many Chinese companies to turn to Europe in recent years. According to a Financial Times report in July, Chinese investment in the US accounted for about 2 percent to 3 percent of China's total overseas investment over the past decade, with much more flowing into Europe, a market that is easier for Chinese investors to enter.

Since US President Donald Trump opted for the "America First" rhetoric, global investors have been increasingly avoiding the US, an internal paper from the Economic and Financial Committee of the EU suggests.

"The decline of the net international investment position, albeit also reflecting the strong performance of the US economy and valuation effects, is a potential vulnerability," the paper said.

As more and more Chinese companies seek to invest abroad to achieve corporate upgrading and transformation, the US may regret a lost opportunity if it insists on protectionism.

The author is a reporter with the Global Times.


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