China’s direct investment in the United States and Europe in significant volumes and play an important geopolitical role, but it cannot be regarded as an unconditional good.
Chinese private investors to invest in overseas property to diversify their assets, and large state-owned or with close links to the company see the potential for access to technologies or establishing a global presence in strategic activities.
Many in the US and Europe welcome the inflow of foreign investment due to the fact that they create jobs, but some complain of unfair competition and consider the sale of sophisticated technologies to the Chinese as a security risk.
There is a perception that the bulk of foreign direct investment China made in America. This applies only 2-3% of foreign investment in China in the last 10 years, with much more investment fell to the share of Europe that is comparable to its GDP and trade volume.
As I mentioned earlier, U.S. foreign direct investment in China is relatively modest in comparison with the much large flows from Europe. This is because European investment in the most part concentrated on industrial goods, and the benefits of this unit more than met the needs of the Chinese market, while us exports was concentrated in agricultural products.
Economic factors only partly explain the differences in foreign direct investment of China. A significant role is played by political vulnerability. Chinese companies are more attracted by Europe, again, because their industrial structures are more complementary. In addition to this, the EU is more receptive to such investments.
The sectors in which it invests, to a variety. According to estimates Rhodium Group, China invests significantly more in the European market of energy carriers and electricity. Activities in the field of road, transport and technical industries also shows that these products dominate in trade relations between China and the EU.
Developed areas of the U.S. economy — it’s entertainment, metallurgical and mining industry, although Beijing is now limited deal — as it shows the lock for the planned purchase of Chinese group Dalian Wanda American television Dick Clark Productions — in connection with uncertainty in their benefit and declining foreign exchange reserves.
For China the EU is much easier to access the market because it offers a greater choice of partners. This can be seen as a strategy of “divide and conquer”: if one member state to restrict access, the Chinese company to enter the market through another country that is a member of the EU. (Thus, for Breccia UK could become a less attractive target for foreign direct investment if it means losing access to the EU).
Despite the fact that partnerships with individual us States are possible, a comprehensive Federal policy dictates that American companies rules, regardless of the location of their headquarters. Compared to the more open conditions of the EU this is a disadvantage for domestic investment.
Another barrier in the United States are security concerns because of its technological advantage helps to preserve its status as a leading world power.
Many Chinese investments are subject to review by the Committee on foreign investment (Cfius) in determining if it don’t break deals with foreign corporations, especially state antitrust and national security. Cooperation with China is only a few percent of the U.S. GDP, but accounts for nearly a quarter of all cases considered by Cfius.
This is particularly important in the field of high technologies. At the end of 2012, the Committee on homeland security recommended that Cfius has blocked transactions involving the Chinese telecommunications company Huawei based on security concerns.
Huawei had more luck in Europe. Britain has organized a special center for the study of Huawei technology and the establishment of compliance with its product safety standards. The company now covers nearly 22% of spending in the infrastructure of the mobile networks in Europe, middle East and Africa. But in North America it is less than 3% of the market of telecommunications.
These successes, however, may be short-lived. After the referendum on Brakcet Prime Minister Theresa may has drawn attention to the need for a more precautionary approach by suspending the Sino-French funding for nuclear programs for security reasons, although later it was resumed.
Following this, in Germany there was a concern in connection with the seizure of a Chinese home appliance manufacturer of high-tech engineering company Kuka. The French President Emmanuel macron recently spoke cautiously about Chinese investments in connection with security considerations.
In addition, the growth of China’s GDP, U.S. and European companies complain of discrimination in connection with access to the growing domestic Chinese market. The issue of reciprocity became part of their negotiation platform.
The best way to solve these problems is the bilateral investment agreements that were under negotiation. However, discussions with the EU was interrupted by Brexton, and the administration of the tramp can stand any kind of agreement that will give American companies the opportunity to invest more abroad.
In Europe and USA believe that the increase of foreign investment from China and the lifting of restrictions on sectors of the Chinese market will create obvious benefits for both parties. These treaties should be a priority in the common agenda, despite the fact that at the moment it doesn’t seem first a political necessity.