Chinese FDI has 'great potential' to benefit US: Report

Updated: 2011-05-05 13:06
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WASHINGTON - Chinese Foreign Direct Investment (FDI) in the United States shows enormous potential to create economic growth and Americans need to better understand the rapidly changing balance between the two countries.

That's according to a report released by the US Asia Society and the Kissinger Institute on China and the Unite States on Wednesday.

"We estimate that Chinese firms will place some $1 trillion to $2 trillion  in direct investment around the world over the coming decade," said the authors of the report, economist Daniel Rosen and Thilo Hanemann.

In 2010 alone, Chinese FDI in the US totaled $5 billion. The report estimates that Chinese firms in the US have already created more than 10,000 American jobs.

With respect to the 50 US states, Chinese businesses have already established operations and created jobs in at least 35 states. Among them, Texas has attracted the greatest share of Chinese investment, followed by New York, Virginia, Illinois, California, Michigan, Oregon, Delaware, New Jersey and Mississippi, according to the report.

The report, which is the most comprehensive and updated study of Chinese FDI in the US, was released days before the two countries to hold the third meeting of Strategic and Economic Dialogue in Washington.

The United States welcomes FDI from China, which benefits the US economy, said US Secretary of Commerce Gary Locke Wednesday at the launch ceremony of the report.

Locke stressed that Chinese FDI is a good thing for American workers and a good thing for American businesses.

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Foreign-owned companies employ some 5 million American workers across every single one of our 50 states. "And increasingly, we are seeing more investment coming in from China," he added.

The report says that US review mechanisms are doing an effective job of protecting vital security interests. However, it warns that continued politicization of the review process against Chinese FDI will choke off future investment and cost American valuable opportunities for job gains and new streams of tax revenues.

The report also outlines US actions to maximize benefits from Chinese FDI. The promotion of FDI from China needs to be taken seriously at the federal level; the US should refrain from playing the reciprocity game and making access to the US contingent on Chinese market openness; the process of screening Chinese investments for US national security concerns should be better protected from political interference, observed the report.

The report suggests that Washington needs to send "a clear and bipartisan message that Chinese investment is welcome."

"We believe the great bulk of potential Chinese investments should not just be permitted but encouraged."