Chinese Foreign Direct Investment in the United States

The Sino-U.S. relationship has become the prevailing issue on the U.S. economic, foreign policy and defense agenda. During the recent presidential election period, President Obama and his administration have repeatedly mentioned China as a strategic competitor but increasingly as a strategic partner, particularly in areas of trade, innovation and economic cooperation. In fact, the U.S. has seen a surge in Chinese foreign direct investment (FDI) in the natural resources, traditional and renewable energy and manufacturing sectors in the years following China’s entry into the WTO.

The Capstone project examines the trends and industries for Chinese FDI in the U.S. as well as its economic, political and national security implications and presents two comparative analyses of Japan’s FDI in the U.S. and Chinese FDI in Canada and Australia. This is particularly important in a time of growing distrust between the two countries given heightened economic and security concerns. What is the current legal and regulatory framework for FDI and what are the major players, CFIUS and the Obama cabinet doing to address growing concerns? Given recent cases of FDI under review, does CFIUS require regulatory reforms in order to refine its mandate and process?

The final report addresses the ways by which the U.S. and China can collaborate to reduce the trust deficit, advocate for more frequent and industry-specific dialogue, encourage greenfield investments as a means to create jobs in the U.S., as well as enforce better governance and greater accountability of Chinese companies, in order to create a more level playing field and to build a sustainable and mutually-beneficial long-term relationship.