US politicians increase fear-mongering about Chinese FDI

The growing hostility and paranoia toward Chinese foreign direct investment in the United States as exhibited by some lawmakers is not an encouraging sign, despite the fact that US officials publicly say the US welcomes Chinese FDI.

It is a sign of an increasingly national security state that is eager to seek enemies while ignoring the huge contributions from Chinese investment.

At a hearing last Thursday by the House Financial Services Subcommittee on Monetary Policy and Trade, Kentucky Congressman Andy Barr, in his opening remarks, described "major nations that are economic competitors, but also potential military competitors. … I am referring, of course, mainly to China," he said.

It is hard to believe that Chinese FDI in the US will receive fair treatment under such a mindset.

The benefit of foreign investment in the US, including the growing amount from China, is obvious.

On the same day as the hearing, the Pew Research Center released a report saying the number of US workers employed by foreign-owned companies is on the rise.

Foreign-owned companies employed 6.8 million workers in the US in 2015, up 22 percent from 2007, according to preliminary data from the US Bureau of Economic Analysis.

Companies based in the UK, Japan, France, Germany and Canada employed the largest number of US workers in 2015, accounting for 58 percent of the total jobs created by foreign-owned companies.

Since the data includes only companies that are majority-owned by foreign companies in 2015, the real figure could be larger if the foreign minority-owned companies were also included.

Chinese companies, who are late-comers in the US, were highlighted in the Pew report.

US employment by Chinese-owned companies has grown exponentially since 2007, showing by far the largest percentage increase in employment. Chinese enterprises employed nearly 44,000 US workers in 2015, more than 30 times more than in 2007, according to the report by Pew's researcher Kristen Bialik.

In fact, the figures from reports by Rhodium Group and the National Committee on US-China Relations suggest a larger contribution to the US economy and employment by Chinese-invested companies in the US.

Chinese FDI in the US tripled in 2016 from the previous year to $46 billion. In nine of 14 industries, Chinese FDI in the US was larger than flows the other way.

Also, 425 of the 435 US Congressional districts host Chinese-invested companies.

Chinese companies added 50,000 US jobs in 2016 alone, bringing the total number of Americans directly employed by Chinese-owned US companies to 141,000 at the end of 2016, more than nine times higher than 2009, according to Rhodium.

These include 131,000 jobs in companies where Chinese investment accounted for more than 50 percent, and 10,000 jobs in companies where Chinese investment was between 10 and 50 percent.

One thing is crystal clear from both the Pew and Rhodium reports — Chinese FDI has contributed to the US economy and employment and the trend will continue if it is not impeded by both the Chinese and US sides.

The control on capital outflow in China has curbed Chinese outward bound investment in 2017. This, however, is only a short-term phenomenon.

The increasing fear-mongering about Chinese FDI by US politicians, as witnessed in the hearing of the House subcommittee on Dec 14, is more damaging in the long run.

Daniel Rosen and Thilo Hanemann of the Rhodium Group have expressed deep concern over the excessive reviews by the Committee on Foreign Investment in the United States and its possible expanded role, as proposed by US lawmakers, targeting primarily Chinese investors.

Contact the writer at chenweihua@ chinadailyusa.com.