NEW YORK — Chinese direct investment into the United States is more than doubling annually, with over $5 billion in 2010 alone. A Special Report undertaken by Asia Society’s Center on U.S.-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 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 political fear-mongering.
The report was launched on May 4, 2011 with a keynote address by Secretary of Commerce Gary Locke (and presidential nominee to become the next United States Ambassador to China).
The authors of the report, Daniel H. Rosen and Thilo Hanemann of The Rhodium Group, estimate that Chinese firms in the United States have already created more than 10,000 American jobs. But despite an overall effective U.S. screening policy for inward investment, political interference threatens to divert legitimate and potentially beneficial investment deals.
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 1980s was as controversial as China's,” the authors say, “but in the following years, U.S. affiliates of Japanese companies invested hundreds of billions of dollars in the United States, and today employ nearly 700,000 Americans.”
The report endorses continued careful screening for national security threats but argues the procedures are in place to filter them out. The authors conclude “We believe the great bulk of potential Chinese investment should not just be permitted but encouraged.”
In a series of policy recommendations, the authors outline U.S. actions to maximize benefits and call on leaders in Beijing to do their part to ensure success: “If China wants a more straightforward hearing for its firms in Washington, it must improve corporate governance at home.”
Among the study’s policy recommendations for the U.S.:
The study outlines recommendations for China as well:
“These investments are going to happen somewhere,” says Asia Society’s Orville Schell. “The question is: will our doors be open to them? Will they happen here?”