Chinese FDI into US: 80,000 Jobs Created

A recent report by the Rhodium Group and the Committee for US-China Relations revealed the scale of Chinese foreign direct investment in the USA, and it is huge.

Chinese FDI in US by Congressional District, (Cumulative US$ Millions, 2000-2014)

Source: Rhodium Group, 2015

Chinese companies invested a total of $46 billion in new businesses and acquisitions in the United States between 2000 and 2014, with most of this investment coming between 2009 and 2014. This flow of investment accounted for around 10% of total FDI inflows in 2014, up from less than 1% in 2007. Currently, Chinese companies based in the US employ around 80,000 workers.

Jobs Provided by Chinese Companies in the US, 2000-2014

Source: Rhodium Group, 2015

Areas seeing the largest investment inflows include North Carolina, Illinois, New York, Virginia and Texas. This indicates that despite headline-grabbing deals such as purchases of major real estate assets, such as Chinese insurer Anbang's purchase of the Waldorf Astoria in New York, investment is quite widely distributed across the country and is aimed at many different business sectors.

North Carolina, for example, is a major recipient of Chinese FDI. Major deals include Shuanghuai's purchase of Smithfield in 2013 and Lenovo's investment in research and manufacturing facilities. Other major investors include Jetion Solar, a solar panel manufacturer, and Tencent, a major Chinese internet company.

With such a wide array of deals and sectors involved, there are various motivating factors for the surge in Chinese FDI into the United States. Access to resources (land, human capital and infrastructure) is of paramount concern, but lower energy costs, more stable wage bills, access to US markets and a more stable, less risky business environment are also significant drivers for the flow of Chinese FDI into the United States.

China: Projected Outbound FDI, 2003-2020(f)

Source: Rhodium Group, 2015

Looking ahead, investment flows are expected to grow, with the report forecasting that total FDI from China will range between $100-$400 billion by 2020, generating employment for between 200,000 to 400,000 employees.

Such investment flows will have negative spillovers, such as concerns about security and intellectual property protection in the tech sector, but are, on balance, a positive force, particularly while investment from major sources such as the European Union and domestic businesses remains weak.

Ultimately, this report highlights the growing significance of Chinese, and Asian, investment in the world economy and, as the region grows and liberalizes, offers an insight into what the world will look like in five years time.

#China #OutboundInvestment #AsiaPacific #US