Is the US Ready for FDI from China?
Studies in International Investment series
Edited by Karl P. Sauvant
One of the world’s most important bilateral relationships is that between China and the United States. An increasingly visible component of that relationship concerns foreign direct investment (FDI). United States firms have invested in China for years – some US$96 billion since China opened to the world in 1978. They have been welcomed and play an important role in many sectors of that country’s economy. Chinese firms are only now beginning to establish themselves in the United States, pushed in many ways by the same factors that drive their competitors from other countries to enter the world market. And like their competitors, Chinese firms enter foreign markets not only through greenfield investments but increasingly through mergers and acquisitions (M&As) as well. Naturally, like all firms, they need to observe the regulatory framework of the United States, both when establishing themselves in that country and when operating in it. They also need to become accepted insiders that contribute to their host country’s economy and society. All indications are that a growing number of Chinese firms are interested in investing in the United States, and are prepared to allocate considerable resources for that purpose. This raises an important question: is the United States ready to receive foreign direct investment from China, including in the form of cross-border mergers and acquisitions? The United States certainly has an open and welcoming investment climate, and its market is one of the most dynamic ones in the world. Not surprisingly, therefore, the United States is...