The Advantages of Chinese FDI

The US remains the world’s leading destination for FDI, accounting for 15 percent of global flows. China accounts for two percent of that flow and wants to invest more, but it raises national security and economic concerns.

Article written by guest writer Rin Mitchell


What’s the Latest Development?

Recently, the U.S. Congress passed legislation to get more foreign direct investment (FDI) into the country. FDI, also known as “insourcing”, is vital to the economyespecially when it comes to jobs and capital in America. According to previous reports, the Chinese government released a memorandum stating they wanted to “foster greater Chinese Investment in the United States.” Reportedly, America receives between 2-3 percent of insourcing from China. However, some Republicans and Democrats “harbor deep concerns about FDI from China, on both national-security and economic grounds.” It is reported that the concerns from both parties are “unwarranted and discriminatory.” Yet, they need to be addressed for two reasons: First, all insourcing must be evaluated by the U.S. Justice Department for market competitiveness, and any investments with “significant anti-competitive effects must be modified or blocked; Second, the Committee on Foreign Investment in the U.S. (CFIUS) “has defined national security broadly to encompass not only defense activities and dual-use technologies, but also critical infrastructure, including telecommunications, energy, and transport – areas of particular interest to Chinese companies.” 

What’s the Big Idea?

The United States wants to see more Foreign Direct Investment to help bring more jobs and raise capital. “Recognizing FDI’s significant contributions to the US economy, President Barack Obama’s Council on Jobs and Competitiveness endorsed the administration’s new Select USA program to coordinate government-wide efforts to promote it.” China’s outsourcing to the United States have increased rapidly, but concerns from the U.S. political partiesalong with screening procedures from the CFIUS have Chinese investors feeling like the targets.  

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