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Year of the Rabbit May Bring More U.S. Opportunities for Chinese Investors

Author: John B. Bellinger III, Adjunct Senior Fellow for International and National Security Law
January 28, 2011
Caijing

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The Obama Administration's rejection of several high profile investments by Chinese companies in U.S. businesses has resulted in complaints from the Chinese government and led many Chinese companies to question whether the U.S. is open to Chinese investment.  During the last twelve months, the Committee on Foreign Investment in the United States (“CFIUS”) -- the  U.S. Government committee that reviews investments by foreign companies that may affect U.S. national security -- reportedly blocked investments by Northwest Non-Ferrous International in Firstgold, a U.S. mining company, and by Tangshan Caofeidian Investment Corporation in Emcore, a U.S. manufacturer of fiber optic equipment.

Although Chinese investment in some U.S. companies or sectors can be complicated, the fact that CFIUS approved other sizeable Chinese transactions in 2010 demonstrates that the door to Chinese investment in the U.S. is not closed.  Indeed, 2011 may be an auspicious year for Chinese investors interested in the U.S. market, especially because President Hu's visit to Washington last week appears to have smoothed over some of the political and economic tensions of the previous year.

In 2010, the CFIUS approved at least four important Chinese investments, according to press reports.  In November, CFIUS permitted the China National Offshore Oil Company (CNOOC) to buy 33 percent of Chesapeake Energy's Eagle Ford shale project in Texas.  Earlier in the year, CFIUS approved China Investment Corporation's purchase of 15 percent of Virginia-based AES, a developer of power projects; an investment by BGP, a major Chinese geophysical services company  in a Texas-based seismic equipment manufacturer; and the acquisition by the U.S. company TTM Technologies of a Chinese printed circuit board manufacturer which resulted in a significant minority equity interest in the U.S. company.

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