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June 28, 2017

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Investment in US hits record level for Chinese

New York -- Chinese foreign direct investment (FDI) in the United States hit record levels in 2012 and shows little sign of slowing, despite lingering worries among some that the inflow of Chinese money presents a growing security risk to the country.

Chinese companies concluded deals worth US$6.5 billion in 2012, an increase of 12 percent from the record US$5.8 billion in 2010, according to a new report by New York-based Rhodium Group, which tracks Chinese FDI.

Thilo Hanemann, Rhodium's research director, said he believes the result reflected both the growing determination of Chinese firms to expand overseas, and the attractiveness of U.S. markets and assets to investors.

The most appealing U.S. sectors to Chinese investors were oil and gas exploration, advanced manufacturing that helps Chinese firms move up the value chain, and assets that allow investors to gain solid returns such as utilities, real estate and hospitality, according to the report.

Headlining the year's activities were Dalian Wanda Group's US$2.6 billion acquisition of AMC Entertainment, the second largest U.S. theater operator, Sinopec Corp.'s US$2.5 billion investment in a third of Devon Energy's five shale gas assets in the U.S., and auto parts maker Wanxiang Group's US$420 million investment in GreatPoint Energy, a company based in Cambridge, Massachusetts, that converts coal into cleaner-burning natural gas.

Meanwhile, a number of major Chinese FDI deals are still awaiting regulatory approval in the U.S., signaling that the growth is expected to continue into 2013.

For example, a group of Chinese investors has agreed to buy an 80.1-percent stake in American International Group's aircraft leasing unit for US$4.2 billion, and Wanxiang has already been announced as the winner of a bid for battery producer A123 Systems, in a bankruptcy auction.

The Rhodium report highlights that the fast-growing Chinese FDI was in fact one of the few bright spots in a gloomy year for the U.S. economy, which has seen overall global FDI decline sharply since 2009 and the outbreak of global financial crisis.

The United Nations Conference on Trade and Development said in October that China edged out the U.S. to become the world's top FDI destination in the first half of 2012, but added the U.S. may return to the top spot during the second half of the year.

While FDI in the U.S. from Europe and Canada declined by more 50 percent in the first three quarters of 2012, China was among the few countries that has now increased investment in the U.S. for five years running, according to figures from the U.S. Bureau of Economic Analysis — a figure representing a rise of more than 300 percent in that time.

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