On November 17, AmCham Shanghai held an event for Two-Way Street: 25 Years of U.S.-China Direct Investment – a new report from Rhodium group and the National Committee on U.S.-China Relations (NCUSCR), with support from AmCham Shanghai and the China General Chamber of Commerce-USA. Steve Orlins, president of the NCUSCR, said that the deeply intertwined investment relationship of the two countries should now influence wider policy choices. Daniel Rosen, founding partner of Rhodium Group, added that policy decisions around investment flows and trade have taken on a new urgency following the U.S. election. The report gives policymakers a clearer, more fact-driven understanding of FDI flows.
Thilo Hanemann, director of Rhodium Group’s cross-border investment practice and lead author of the report, presented the findings. Rather than looking at financial flows (as does the U.S. Bureau of Economic Analysis), the report uses a new transaction-based approach that analyzed nearly 8000 transactions dating back to 1990. Using this method, the report concludes that total American investment into China from 1990-2015 was USD$228 billion – three times the $75 billion reported by the U.S. government. While investment flows in the opposite direction are a newer phenomenon, the report shows 30-40% average annual growth over the past five years, reaching a total of $64 billion.
Rosen concluded the presentation with a list of policy implications. First, the deepness of integration makes it important to consider the consequences of a tit-for-tat trade war and who will suffer. Secondly, in an era of globalization it is important to view the U.S.-China relationship in a multilateral context, not just bilateral. Finally, Rosen stressed that the data revealed how complex the issues of symmetry and reciprocity are.
The session closed with a business leader-led Q&A discussion. Cecilia Ho, president of International Paper Asia, and Aina Konold, vice president & CFO of Gap Inc. Greater China, discussed their companies’ histories of investment in China. Calven R. Wong, deputy general manager of public affairs for Fosun Group, talked about Fosun’s $8 billion of investment into a variety of sectors across America.