U.S.-China FDI far higher than official data shows: report

EghtesadOnline: Foreign direct investment flows between the United States and China are far higher than official data shows, new research indicates, highlighting the close connection between the two economies even as tensions around cross-border deals rise.

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14 November 2016

Last week's surprise U.S. election result has cast a shadow over the U.S.-China relationship, as President-elect Donald Trump has threatened to tear up trade deals and label China a currency manipulator on his first day in office, Reuters reported.

U.S. FDI into China totaled $228 billion from 1990-2015, much higher than the $70 billion to $75 billion reported over the period based on U.S. and Chinese government data, according to a report published on Monday by Rhodium Group, an economic research consultancy specializing in Greater China and India.

Chinese investment into the United States totaled over $64 billion over the same period, according to Rhodium, based on individual transaction data, compared to official estimates ranging from $15 billion to $41 billion.

The report notes that investment by U.S. firms into China have generated 1.6 million jobs, while Chinese firms employ over 100,000 people in the U.S.

U.S. FDI flows into China, however, have been declining since 2012, the report said.

This is partly due to China's slowing economic growth, but also because of "Chinese restrictions on foreign investors in most industries, including growth industries and services where American businesses would like to expand," it said.

According to Rhodium, Chinese investment into U.S. exceeded that of U.S. investment into China for the first time in 2015, highlighting Chinese companies' rising global influence and the changing dynamics of the relationship.