“China is now the second-largest economy in the world. They are going to surpass the U.S. And they are only starting their foreign direct investment,” Hanemann said. “There are billions and billions of dollars to come.”
The Obama administration this week approved the acquisition of bankrupt Massachusetts battery maker A123 by a Chinese firm, a deal opposed by some members of Congress because of federal grants the company had received and because of its work on defense contracts.
Despite the controversy over such deals — such as the rejected acquisition of an Oregon wind farm close to a U.S. military facility — Chinese ownership of U.S. companies and property remains small compared with the amount owned by firms or residents from elsewhere, and the majority of deals move ahead with little public notice.
Chinese companies invested $6.5 billion in the United States last year. That’s a record and a 17 percent increase over the prior year, according to data assembled by the Rhodium Group.
But that’s also about the same amount invested in the United States by Spain, a country whose multinationals have been seeking markets outside the beleagured euro zone.
It is also small compared with overall foreign direct investment — the long-term acquisitions of companies, real estate or other hard assets. Before the economic crisis, the United States typically received about $250 billion a year in foreign direct investment, and the figure was back near that by 2011.
What’s been generally constant is the nationality of the investors, with typically heavy flows from Europe and close economic partners, such as Japan. According to International Monetary Fund data as of the end of 2011, Britain and Japan accounted for more than a quarter of the estimated $2.5 trillion stock of foreign direct investment in the country.
Neither is China high on the list of sensitive deals, according to the Committee on Foreign Investment in the United States, the Treasury-led group that reviews any investments with implications for national security. In the most recent CFIUS report, which covers calendar 2011, Chinese companies were involved in 10 deals that triggered a CFIUS review — placing the country third, behind France (14) and Britain (25).
In a separate list of transactions involving only “critical technology companies,” China was ninth: Only four deals involving Chinese firms fit that more-sensitive description, compared with 30 from Britain, 13 from France, eight from Japan, seven each from Canada and the Netherlands, six from Germany, and five each from Israel and Switzerland.
In a large and relatively open economy, the whole point is for foreign-owned companies to go about their business of hiring, investing and selling with little attention to the fact that they are, for lack of a better term, foreign. Do workers at a Subaru plant in Indiana think about their Japanese connections? Do shoppers at a Zara clothing store realize its Spanish roots?
And the same is largely true for China: Buy a movie ticket at Mazza Gallerie or in Georgetown these days, and it benefits China’s Dalian Wanda Group, which purchased the AMC theater chain last year.