As U.S. companies continue to seek outside sources of investment, they continue to find a steady of stream of capital from China.
According to the American Enterprise Institute and the conservative Heritage Foundation’s China Global Investment Tracker, the United States remains the primary target for investment, with more than $180 billion infused from China from the start of 2005 through 2020.
“There will be a post-COVID-19 bounce but the 2017 spending level of $23 billion will be difficult to regain due to greater American suspicion and tighter Chinese finances,” the organizations wrote in the tracker.
Chinese investment reached its peak in 2016, with 61 deals totaling $53 billion, according to AEI. Since that time it has dropped precipitously. The COVID-19 pandemic also has put a chokehold on Chinese investment around the globe. In 2020, Chinese investment totaled $1.1 billion on three deals, according to the institute.
“In addition to the heavy blow from the COVID-19 pandemic, American investment review has become more rigorous,” the institute wrote in its tracker. “As a result only a moderate rebound is likely in 2021.”
While Chinese investment has proved to be beneficial for many companies, the nation cannot be mistaken as a friend of the United States. All Chinese companies have to report back to that nation’s government. Moreover, the investments made by China result in a small number of domestic jobs.
“The U.S. certainly should not ban China’s investment but a set of restrictions is necessary,” AEI wrote in the China Global Investment Tracker. “Chinese firms that receive stolen intellectual property or otherwise break American law should be barred, as should those involved in serious violations of human rights.”
According to AEI’s China Global Investment Tracker, investment has been diverse over the years, with six industries attracting more than $15 billion in investments. According to the institute, these industries include energy, entertainment, finance, real estate and tourism and transportation.
Chinese investment also has been largely concentrated on the East and West coasts. AEI’s China Global Investment Tracker notes that New York leads all states with investments totaling $56.8 billion in 57 deals. California is second with $40 billion spread across 82 deals. Chinese investment found its way into America’s heartland, with Illinois reaping $12.2 billion on 12 deals.
Security also remains an issue. AEI noted that Chinese firms shouldn’t be allowed to purchase key technologies or access to personal data. If security is enforced, China’s investment in the United States can have a positive impact.
And although COVID-19 dealt a blow to Chinese investment in 2020, AEI said in its tracker it expects a recovery to kick off during 2021 and continue into the next year. The institute points out, however, that data in its tracker can be affected by a lack of transparency by Chinese firms, which lock down the information regarding outbound investment and construction it tracks. While the country has tried to minimalize the impact of COVID-19, AEI noted that the pandemic has affected both transparency and activity.