FDI in US up 68%, but share from China drops marginally
The US saw a 68 percent jump in foreign investment last year over the year prior. China’s investments into the US dipped slightly between 2014 and 2015, while those made through acquisitions nearly tripled.
Expenditures by foreign investors to acquire, establish or expand US businesses grew to $420.7 billion in 2015 from $250.6 billion in 2014, according to a report released on Wednesday by the Bureau of Economic Analysis at the US Department of Commerce.
Of that, Chinese investments totaled $12.3 billion in 2015, slightly lower than the $13.1 billion it invested in 2014. But the amount of investments spent on acquiring US businesses hit $5.8 billion, compared to $2.2 billion in 2014.
Though Chinese investments to the US are at an all-time high — 2016 is on track to be another record year — they still make up a relatively small portion compared to other countries like the United Kingdom, Japan, Germany and France.
The numbers recorded in the survey include transactions resulting from corporate inversions, which are typically when US companies merge with smaller companies in low-tax countries to lessen tax burdens. For this reason, Ireland topped the list of foreign originators of capital, adding $176.5 billion worth of investment in the US last year.
China’s FDI into the US is expected to be around $20 billion to $30 billion this year, with much of it coming from mergers and acquisitions, according to the Rhodium Group, a firm that tracks Chinese investment in the US.
Chinese home appliances company Haier bought GE Appliances this year for $5.4 billion, the largest ever Chinese acquisition overseas. Analysts have predicted that the deal, which closed last month, will put China’s total FDI far above what it was in previous years.
China’s Ministry of Commerce reported this week that Chinese FDI in the first half of 2016 rose 5.1 percent compared with the same period last year. The investments totaled $69.42 billion, and June FDI increased 9.7 percent compared with the same time last year, recovering from a 1 percent decline in May.
Chinese investments in the US have primarily been in real estate and the financial services sectors, with investments in health and biotech and entertainment growing year on year.
This is the first official report on FDI in the US for 2014 and 2015, though the Commerce Department conducted similar studies every year starting in 1994 before it stopped tracking foreign investments from 2009 to 2013 due to budget cuts.