Chinese investment in US grows

Updated: 2013-10-04 12:15

By Amy He in New York (China Daily)

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The US came in behind Hong Kong to become the second-largest recipient of foreign investments from the Chinese mainland.

China invested a total of $4.05 billion in the US, a 123.5 percent increase from the previous year, according to the report released in September, the Ministry of Commerce, National Bureau of Statistics and the State Administration of Foreign Exchange.

China's outbound direct investments totaled $87.8 billion in 2012, which is a record high for the country, according to Xinhua. For the first time, China became one of the world's three biggest outward investors.

China's foreign investments continued to increase this year. According to a July report from Rhodium Group, which analyzes business and economic trends, Chinese investors showed a strong first half in 2013 for foreign investments: "After a strong first quarter, Chinese investors spent another $2.5 billion on transactions in the US in [the second quarter]. Completed transactions in the first six months of 2013 total $4.7 billion, the strongest first half ever recorded," wrote Thilo Hanemann. "More than $10 billion worth of deals are currently pending."

Private investments "continued to be strong" in the second quarter, "accounting for more than one third of the total investment value," he wrote.

Hanemann explained that the Strategic and Economic Dialogue meetings - bilateral talks established in 2009 between the US and China to discuss various issues - to be held in July will help US-Chinese investor relationships.

"While still not a breakthrough, this is a positive signal amid persistent tensions around espionage and calls by US lawmakers to broaden investment reviews to include economic security criteria", he wrote.

"The announcement that China agreed to [bilateral investment agreement] negotiations without preconditions and covering all industries and stages of investment provided much needed positive news amid a heated public debate in the US about Chinese investment," according to Hanemann.

He cited Shuanghui International's takeover of US-based Smithfield as one that "triggered a fresh debate in the US over the sufficiency of the current investment review framework". The acquisition of Smithfield was valued at $7.1 billion including debt, making it the largest Chinese acquisition of an American company to date. The Chinese pork processor's deal with Smithfield would be a "watershed event" that will eventually lead to more transactions between businesses in the two countries, analysts predict.

Real estate also contributed to Chinese investment in the US. Earlier this year, real estate tycoon Zhang Xin, along with other investors, paid $1.4 billion for a 40 percent stake of the General Motors tower on Fifth Avenue in Manhattan, making it one of the largest US property purchases by Chinese investors.

China Construction America acquired a building in New Jersey in April in a $70 million all-cash transaction. The company said in a statement that it plans to use the building "as corporate expansion space for the firm."

Wang Jianlin, chairman of China's largest commercial real estate developer Wanda Group, said in June that the company plans to invest $1 billion to develop a five-star hotel in New York. Wanda Group, which has shown much interest in foreign companies, purchased US cinema chain AMC for $2.6 billion last year. In September, Wang told Reuters that the group "can afford to spend as much as $5 billion every year to buy foreign firms or assets."

(China Daily USA 10/04/2013 page10)