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China is investing more in USA than USA in China – However, by bullying Russia and China to contain them US may revert this trend.

June 8, 2014   ·   0 Comments

Paradigm Shift for the U.S.-China Economic Relationship

 

Photographer: Tomohiro Ohsumi/Bloomberg.

Pop quiz: How much more did U.S. companies invest in China than Chinese companies invested in the United States in 2012? Two times as much? Three times? Ten times?

Trick question! Beginning in 2012, inbound investment in the United States by Chinese companies surpassed U.S. outbound investment into China. China has long been a holder of U.S. debt, but now Chinese enterprises are investing directly in our economy.

This development marks a paradigm shift in how we should think about the U.S.-China economic relationship. A look at the analysis in a Chamber/Rhodium report released last month shows:

  • After five years of rapid growth, Chinese annual foreign direct investment (FDI) in the United States now exceeds FDI by U.S. companies into China by most measures — including China’s own official statistics.
  • These investment flows bring benefits for Americans, including job creation and a more competitive consumer market, and have the potential to be a major contributor to stronger U.S.-China relations.
  • However, this turning point calls for increased policy attention, including U.S. leadership in support of continued openness to Chinese investment in the United States.
  • This development also underscores the importance of bold action by China to liberalize investment restrictions, including an early harvest of investment opening in important sectors this year to deepen investment and a dramatic reduction in China’s draft negative list as a first offer in the U.S.-China Bilateral Investment Treaty (BIT) negotiations to boost prospects for an agreement.

Above all, we need to shed old stereotypes and come to better appreciate the significance of the paradigm shift now underway.

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