Chinese Direct Investment in the United States

Thilo Hanemann
Daniel H. Rosen
EABER Working Paper Series, No 78
The United States and China are at a turning point in their economic relationship. In the past, foreign direct investment (FDI) flowed predominantly from the “developed world” to the “developing world,” from countries such as the United States to those like China. Now, Chinese firms are increasingly investing in developed economies, driven by structural adjustment at home. In this article we describe this inflection point for Chinese FDI in the United States and examine the patterns of Chinese investment in America to date. We then discuss the potential impacts of greater levels of Chinese FDI and how the special characteristics of China’s political and economic system challenge the traditional stance of openness to FDI in the United States and other developed economies. Finally, we summarize the political reaction in the United States to date, with a particular focus on emerging “next generation” policy issues.