Chinese investments in U.S. firms total nearly $50 billion and could reach $200 billion, study says
Chinese government is giving state-owned enterprises 'a big push to go international,' professor says
Rising energy and labor costs in China have helped to push the trend toward direct U.S. investments by Chinese individuals and companies over the last five years, said the study by global research firm Rhodium Group and the nonprofit National Committee on U.S.-China Relations.
Chinese investors have bought or created 1,583 U.S. companies over 15 years through December that now employ 80,600 full-time workers after a five-fold increase in the last five years.
California was the top destination as Chinese investors put $5.9 billion into almost 370 businesses that provide about 8,300 jobs, mostly in the Los Angeles and San Francisco metropolitan areas.
The fast-rising investment pales in comparison to three decades of far greater flows of U.S. capital into Chinese manufacturing, and China's direct investments in U.S. companies still are far from those made by a host of other countries.
Still, Chinese purchases and start-ups should deepen ties in ways that mere purchases of foreign products cannot do, said Stephen A. Orlins, the National Committee's president.
"Investment brings people together. Trade, less so," he said.
Elsewhere, Chinese investors have been largely welcomed at new and existing firms.
In West Los Angeles, more than 1,000 employees, called rioters, labor at online video-game producer Riot Games, the maker of the popular "League of Legends" game. Chinese Internet company Tencent Holdings Ltd. bought a majority stake in the firm in 2011 for $250 million.
In eastern Virginia, Shuanghui International Holdings of Hong Kong spent $4.7 billion two years ago to buy Smithfield Foods Inc., the largest U.S. pork producer with 3,700 employees just in the state at the time.
In Chico, Calif., Chinese online commerce giant Alibaba Group is employing 130 people at its fledgling online U.S. retailer, 11 Main Inc.
Jeffrey Towson, a Peking University investment professor, said Chinese outbound direct investment activity is still in its relative infancy. As China's economy slows and it tries to curb over-investment in ports and roads and other infrastructure, state-owned enterprises in sectors such as railways and construction are looking to go abroad.
"The government is giving them a big push to go international," he said. He cited as an example China's recent bid for a high-speed rail project in Mexico, which was initially approved but later fell through.
Rhodium's study stems from its desire to get a clearer picture of foreign investments in the U.S. Its study doesn't count deals in progress, only completed transactions. It also traces the money that China says flows into Hong Kong, a semi-autonomous Chinese city, to show how much of it often ends up in investments elsewhere.
The study includes Chinese investments in large-scale real estate but not residential real estate — a hot market in California for Chinese millionaires — or construction projects because those jobs aren't permanent.
The Chinese are the top foreign buyers of U.S. homes, spending $22 billion on residential real estate from April 2013 to March 2014, according to the National Assn. of Realtors. About 51% of reported purchases were in California, Washington and New York.
The Chinese Ministry of Commerce reported that the nation's total foreign direct investment in 2013, the latest year for which statistics are available, was $107.8 billion, making it the third largest in the world behind the U.S. and Japan.
But it calculated outflows to the U.S at just $3.9 billion, only 3.6% of the total and 4.3% lower than the previous year. - Read more on L.A. Times
