The U.S. government should open its door wider to Chinese investments and Chinese companies have to further their understanding of U.S. law and regulatory compliance as Foreign Direct Investment (FDI) between the world's top two economies has been on a rapid rise, experts said on Thursday.
BE MORE OPEN, INCLUSIVE TO CHINESE INVESTMENT
"The U.S. government should be more open and inclusive to Chinese investments, as Chinese companies come to the U.S. with high expectations for an open and inclusive market. That is one of the major factors that makes U.S. attractive to foreign companies," Xu Chen, chairman of China General Chamber of Commerce (CGCC) and president & CEO of Bank of China U.S.A., told Xinhua after launching a new survey on Chinese enterprises in the United States.
Over half of Chinese enterprises are concerned with U.S. regulatory oversight of foreign companies despite their growing presence in the world's largest economy, according to CGCC's 2017 Annual Business Survey Report on Chinese Enterprises in the United States.
Some 53 percent of the Chinese companies with businesses in the United States believe that the current U.S. administration will "tighten its general oversight of foreign companies," the survey said. In addition, reviews by the Committee on Foreign Investment in the United States (CFIUS)remain a concern for Chinese companies. A quarter of the companies surveyed consider CFIUS reviews to be "politicized and opaque."
"There is much distrust and misunderstanding about Chinese investments and of China in the U.S. market," Xu said.
Private Chinese firms account for 70 percent of the current Chinese direct investment in the United States and the trend will continue as Chinese state-owned enterprises "have been unfairly treated here," he said.
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 United States totaled 110 billion dollars by the end of last year, said a joint report released in May by the Rhodium Group and the National Committee on U.S.-China Relations (NCUSCR).
In 2016, Chinese companies invested a record 46 billion dollars in the United States, tripling the amount in 2015 and representing a tenfold increase compared to just five years ago, said the report, which also found that about 79 percent of the total Chinese investments in the United States were made by private companies.
"Chinese investments in the U.S. will increase even faster and further benefit the U.S. economy and job creation if misapprehensions about Chinese state-owned enterprises -- the driving force of the rising Asian power -- are corrected here in the United States," Xu said.
In the last seven years, employment by Chinese-owned firms in the United States had jumped ninefold to 140,000 jobs last year. By the end of 2016, all 50 states and 98 percent of congressional districts hosted operations of Chinese companies, according to the Rhodium Group and NCUSCR report.
Some U.S. politicians tend to think Chinese state-owned enterprises coming to America for "some political purpose rather than simply to make money," Xu said.
"I sincerely hope these friends get to know more about the massive changes in China over the years in terms of economic management and overseas investment," Xu said. "In contrast, the U.S. academia knows China so well and supports opening doors wider to Chinese investors."
U.S., CHINESE ECONOMIES HIGHLY COMPLEMENTARY
The U.S. and Chinese "economies are highly complementary to each other, and the bilateral ties have been proven mutually beneficial," Xu said.
He believes that despite the distrust and suspicion about Chinese investments in the United States, the two governments will make every effort to wrap up the negotiations for the long-awaited U.S.-China Bilateral Investment Treaty (BIT), which will create more transparent rules for approving investments in both countries.
According to the CGCC survey, despite challenges, 87 percent of Chinese companies will reinvest all or most of their U.S. profits in U.S. operations, as they are committed to long-term investment. Eighty-six percent of companies expect their U.S. revenue to grow in the next three to five years.
Chinese companies are making long-term investments in the United States and they are unlikely to change their policies and strategies in the face of temporary uncertainties and difficulties, Ji Li, an associate professor of law from the Rutgers University Newark, and co-author of the survey, explained to Xinhua.
"Yet Chinese banks and companies have to further their understanding of U.S. law and regulatory compliance, seeking advice from local consulting companies including law firms and accounting firms in making deals, and resorting to lobby groups for persuading politicians to support related deals."
"When in Rome, do as the Romans do," Li said when asked how Chinese companies navigate the complex U.S. legal and regulatory systems.
The CGCC's survey is based on responses collected in March from 213 Chinese firms operating in the United States across various business lines. It is the fourth year in a row that the CGCC and CGCC Foundation have conducted such a survey on Chinese companies' assessment of the U.S. market, their business performance, corporate management, and strategic development.
