Despite previous blocks of business deals, Lago says no sector 'off limits'

BEIJING - Despite their previous frustrations, Chinese investors will find that the doors remain open for them in the United States, and there is potential in private sectors and the IT industry, a senior US financial official said on Wednesday.

There are no "off-limits" sectors for foreign investment in the US, though national security is still the main concern in reviewing individual cases, said Marisa Lago, assistant Treasury secretary for international markets and development, in an interview in Beijing.

Lago said the review mechanisms are neither mandatory nor directed toward any particular country and are but a small part of the overall investment experience between the two nations.

From 2008 to 2010, only 16 of 313 transactions submitted to the US Committee on Foreign Investment, an interagency government body to review national security issues, led to mitigating measures, she said.

Lago declined to comment on how many of the 16 cases involved Chinese companies.

The US would welcome the development of China's IT sector, she said, and strategic investment in IT companies in the US.

"We look to the private sector (in China) for its innovation, and they are the ones who are going to seek out business opportunities," she said.

Lago's comments were viewed by experts as intended to ease the tension caused by setbacks some major investors from China experienced, such as Huawei Technologies Co Ltd, and to convey a message of welcome to Chinese investors, who are expected to help boost a weak US economy and stimulate job creation, thus countering the high unemployment rate.

Zhou Shijian, a senior researcher with the Center for China-US Relations at Tsinghua University, said the US has always been a top destination for foreign direct investment (FDI) and that role will receive greater emphasis through US President Barack Obama's plan to attract trillion-dollar foreign investment over the next five years.

FDI from China to the US increased eightfold between 2005 and 2010, from $700 million to $5.8 billion, and Chinese companies are making important contributions to US output and employment, Lago said.

But Zhou highlighted another set of statistics: US investment in China amounted to $66.9 billion by June of 2011 while Chinese investment in the US was only $5.17 billion during that period.

"So if you are really going to compare the investment climates of the two countries, the figures speak for themselves," he said.

In terms of attracting investment from China, US local governments are generally more open than the federal government because they need the jobs to generate growth and have fewer political concerns, Zhou said. "To that end, medium-sized and large investors are more competitive than smaller companies because they have a sound management system and can create a large number of job opportunities more quickly."

Zhou said that the US government need not be distrustful about dealing with China's State-owned enterprises.

"State-owned is not necessarily State-operated, because their profits and risks are still their own," he said.

"Asset prices in the US are now relatively low because of the economic downturn, and the country is remodeling its manufacturing sector, which provides great opportunities for Chinese investors," said He Weiwen, a Sino-US trade expert at the University of International Business and Economics in Beijing.

But investors should be smart in dealings with potential business partners, and make a thorough study before taking action, and also seek the help of global public relations agencies during the process, He said.

"Meanwhile, Chinese companies should take into consideration the benefit to the company as well as the welfare of local communities to achieve win-win cooperation," he said.