Chinese Foreign Direct Investment into the United States

  • September 01, 2014
  • Lieutenant Colonel Mark Alan Sexton

The wave of Chinese Foreign Direct Investment (FDI) into the United States serves as a means to address the current trade imbalance, reduce U.S. unemployment, and even encourage economic growth. However, U.S. critics point to the current Chinese policy of using subsidized State Operated Enterprises (SOEs) and using devalued currency to gain an unfair competitive advantage. In addition, there is an anxiety that the Chinese desire for economic transformation will facilitate the theft of U.S. intellectual property and technology. Understanding how the Chinese came to rely on SOEs and a devalued currency is crucial to understanding the current international economic environment. In addition, the U.S. historical and current reaction to FDI requires analysis as the two nations embark on an era of economic interdependence. In order to navigate the challenges and opportunities of this new reality, U.S. policy makers and the Communist Party of China will be required to foster economic strategies that not only maintain, but also advance the interest of both nations.