FDI in US up 68%, but share from China drops marginally

China Daily (Canada) - - FRONT PAGE - By AMY HE in New York amyhe@chi­nadai­lyusa.com

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.

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