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China-U.S. two-way FDI at record high in 2016

A worker records data at Fuyao Glass America's new facility in Moraine, Ohio, the United States on Oct. 7, 2016. Fuyao Glass America is part of Fuyao Industry Group Co. Ltd., a leading international manufacturer of automotive and industrial glass located in China.Photo: Xinhua

Foreign Direct Investment (FDI) between China and U.S. passed 60 billion U.S. dollars in 2016, the highest in history, according to a report jointly released by the Rhodium Group and the National Committee on U.S.-China Relations (NCUSCR).

"U.S.-China two-way FDI reached an all-time high in 2016, elevating the importance of this facet of the bilateral economic relationship," said the joint report.

"What used to be a one-way street - with money flowing predominantly from the United States to China - is now a two-way highway with tens of billions of dollars in annual FDI flowing in each direction," it added.

According to the joint report, the cumulative value of U.S. FDI transactions in China reached over 240 billion U.S. dollars by the end of 2016, while the cumulative Chinese FDI in the U.S. totaled 110 billion dollars by the end of last year.

In 2016, Chinese companies invested a record 46 billion dollars in U.S., tripling the amount seen in 2015 and a tenfold increase compared to just five years ago.

Apart from the rapid growth for two-way FDIs, the variety of investors and target industries have also expanded from traditional energy and real estate industries to consumer services and products industries, reflecting China's growing appetite for more investment in order to meet the growing domestic consumption demand.

According to the report, in contrast to the dominance of fossil fuel investments before 2013, more than 90 percent of Chinese FDI in 2016 focused on services and advanced manufacturing.

In 2016, real estate and hospitality, information and communications technology, entertainment, consumer products and financial services stood out as primary targeted industries for Chinese investment in U.S., said the report.

Chinese investors further expanded and deepened their footprint in U.S. in 2016, with U.S. coastal states, such as New York and California still the major beneficiaries of Chinese investment, while South and Midwest states also received significant Chinese investment in 2016.

A separate report released by Rhodium Group showed that all 50 states and 98 percent of congressional districts in U.S. hosted operations of Chinese-owned companies by the end of 2016.

Private investors have become the major drive for the rapidly-growing Chinese investment in U.S, with about 79 percent of the total Chinese investment in U.S. being made by private companies in 2016, according to the report.

The joint report expected that the Chinese investment in U.S. would moderate in 2017 compared with that in 2016, but the two-way FDI will remain a major part of U.S.-China economic interaction for years to come.

While the U.S. robust economic outlook, large consumer end market and its large base of technology and brand assets will be huge attractions to Chinese investors, there would be greater uncertainty and political deal risk for Chinese investors in the US, the report warned.


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