Sunday, May 12, 2013

Chinese Investment in the US - Chicago Booth Emerging Markets Summit

As a second installment from the Chicago Booth Emerging Markets Summit which took place on April 27, one of the sessions focused on Chinese investment in the US. Many had anticipated a greater flow of investment flow into the US during the recession, and Chicago has been very interested in serving as a headquarters location for Chinese manufacturing and distribution with access to the entire country.

Zhao Weiping, Consul General of China in Chicago, offered a nice summary of the state of Chinese investment in the US, though expressed the concern that Chinese investors may be reluctant to act in greater numbers due to a perception that their increased investment may be politically unwelcome.

In his presentation, Consul General Zhao indicated that Chinese investment in the US has a short history - up from $2.7 billion in 2002 to $77.2 billion in 2012, for an increase of some 28 times. Here are some notable examples.

While Chinese officials are making a strong case to Corporate China that investment into the US should be increased, there is a perception among Chinese investors that the US is not open to Chinese investment, and Consul General Zhao provided several examples of investments that have been blocked.

I countered at the session and personally to Consul General Zhao that the US is actually very open to Chinese investors, that those investments that have been blocked are some of the small numbers of inbound US investments that allegedly raise national security concerns, and that the vast majority of investments coming to the US from China are of a kind and size that will encounter no resistance at the US national level and will be welcomed with open arms at the state and local level.

Moreover, I suggested that viewing US-bound investment through a lens of "government regulation/governmental review" may be understandable coming from an economy such as China with much more governmental involvement in regulating foreign investment. However, such a lens suggests much more governmental involvement in inbound investment in the US than is actually the case and may unnecessarily alarm potential foreign investors whose manufacturing, distribution and other activities are subject to absolutely no governmental regulation or interference.

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