Will 2016's Record PRC FDI in US Continue in 2017?

♠ Posted by Emmanuel in , at 1/02/2017 03:36:00 PM
2016 was a banner year for Chinese investment in the United States.
Unbeknownst to many amid the China-bashing engaged in by Donald Trump and others is that, actually, investment by China-based companies in the United States hit an all-time high in 2016. As is often the case, rhetoric often does not match up to reality. That is, the Chinese have actually found the US to be a good place to invest that's fairly receptive to PRC money (outside of "national security"-related sectors):
Chinese companies invested a record $45.6bn in the US in 2016 despite a presidential campaign heavy on Beijing bashing. But Donald Trump’s imminent arrival in Washington is among factors making the feat unlikely to be matched this year, according to a new report.

The surge in Chinese foreign direct investment into the US documented by Rhodium Group, a research firm, led the annual flow of corporate acquisitions to triple over 2015 levels. It also took the stock of China’s long-term investment in physical assets over $100bn for the first time, with Chinese companies now employing more than 100,000 people in the US.
Now, however, the fear is that president as opposed to candidate Trump may put a halt to further PRC investment in the United States:
That pattern has led to an imbalance. In a November study backed by the National Committee on US-China Relations and the China General Chamber of Commerce, Rhodium said US companies had invested $228bn in China since 2000. In its latest report the group said cumulative Chinese investment in the US over the same period had reached $109bn, with almost half of that coming last year alone.

The rapid increase in 2016 came despite rising political scrutiny of Chinese investment in Washington and a presidential campaign in which Mr Trump, the eventual winner, threatened a trade war with China and blamed Beijing for the loss of industrial jobs in key US states.
What's the basis for the Trump fear? He supposedly has a bevy of China-bashing advisers and prospective appointees for government posts:
But Rhodium’s analysts said the new uncertainty surrounding Mr Trump’s administration and particularly his appointment of China hawks to oversee trade policy meant Chinese companies were unlikely to repeat that level of investment in 2017.

Chinese companies are waiting for regulatory approval for acquisitions worth $21bn and have committed more than $7bn to announced greenfield projects that have not yet started construction, according to Rhodium.
As for me, I do not believe that Trump would discourage Chinese investment. I expect the opposite, in fact. To begin with, his rhetorical concern--economically insensible as it may be--revolves around US companies taking their operations and hence jobs with them abroad. What if foreign companies instead set up shop in America and hired American workers? In the past, especially during the 80s when Trump became a public figure, he's been no less critical of Japan as he is now of China. Remember though that he's now touting Softbank founder Misayoshi Son's promises to increase US-based jobs at its Sprint subsidiary:
Speaking to reporters at his Mar-a-Lago resort in Florida, Trump said telecom giant Sprint, which is owned by Tokyo-based Softbank, would take 5,000 jobs from other countries and move them to the United States. But Sprint said the effort is more complex, and nearly all of its roughly 30,000 employees already work here.
What's the difference if Chinese instead of Japanese firms want to "bring" jobs to America for Trump? I think he'd welcome those equally. There is no reason to bash Chinese firms simply for being Chinese if the objective is job creation Stateside in Trump's logic. It may be convoluted and economically suspect (Sprint is a money loser for its parent company), but hey, that's how his reasoning would pan out with regard to Chinese FDI.

We'll see; it won't be much longer now. Also see the rest of the Rhodium report which has more interesting tidbits.