Using data from the most recent year, what is the flow of China’s FDI into your country? What is the stock of China in your country? Relative to other countries whose multinationals undertake FDI in your country, what is China’s ranking—in both flow and stock—close to other countries?

Case 2.4

Using data from the most recent year, what is the flow of China’s FDI into your country? What is the stock of China in your country? Relative to other countries whose multinationals undertake FDI in your country, what is China’s ranking—in both flow and stock—close to other countries?

In 2016, Chinese FDI came to $45.6 billion, three times that in 2015. With the current organization under President Trump, there might be a “drawback or withdrawal hazard” as the US seeks after a “Protectionist Policy (China’s OFDI, 2016). An aggregate worth of US FDI exchanges in China came to more than $240 billion before the end of 2016. The total Chinese FDI in the US added up to 110+ billion dollars before the finish of 2016 in the administrations and assembling industry.

Compare the flow (in the most recent year) and stock of FDI from your country in China versus the flow and supply of FDI from China in your country. Which is bigger? Why?

A World Investment Report published by UNCTAD in 2017 states that China is the third-largest FDI recipient after the United States and the UK. The services and manufacturing opportunities in China go unmatched as Europe, UK, and the US find margins increase and cost decrease in those sectors providing reasonably priced goods and services to its citizens. After the US, China’s economy was ranked the second most desired to multinational companies for 2017-2019; investments from China were appraised at $183 billion in 2016, outpacing investments flowing into the country (Mazenda & Masiya, 2021). In contrast, the cumulative value of US FDI transactions in China achieved over $240 billion end of the year 2016, while cumulative Chinese FDI in the US totaled $110 billion by the end of last year (China, 2017). US FDI dominance can be attributed to energy and technology, which drives and at times dwarfs China’s 90% focus in the manufacturing and services industry.

Why has China’s OFDI received such sensational (but often unsubstantiated) media reporting regarding its scale and scope?

Though the US and China are not official at war, the US and Chinese relations have been opposed since the cold war and China’s turn to “Red China.” China has a sizeable expanding market, whose OFDI activities create jobs for the US. However, historically, US media has often ridiculed Chinese government activities that can hinder Chinese investments. Lack of transparency, low level or lack of IPR, corruption, civil rights issues, legal uncertainty, or protectionist measures that favor China’s local business has colored China as a “Pragmatic Nationalist.” There is a more radical view that places Democratization as being an enabler of hostility. To protect corporate power against democracy, Western governments give a few private individuals control of public information and deputize them to shape the country’s ideology and control citizens’ understanding of their world (Porter, 2018). This statement though controversial, is consistent with US media hostility regarding China’s OFDI activities.

Identify the largest FDI project (in terms of dollar amount) undertaken by Chinese multinationals in your country. Evaluate its pros and cons, and discuss whether its advantages to the host economy (that is, your country) outweigh the disadvantages.

China’s OFDI projects are concentrated in the South and the Midwest United States, impacting about 140,000 jobs, 1300 new operations, investing $46 billion (He, 2016). The Midwest, particularly Texas’s great state with nearly half of China’s FDI, invests in projects focused on the energy and chemicals industry (Texas, 2016). On a happy note, Chinese OFDI in the Midwest aligns with current policies to put America back to work again. On the other hand, how does Chinese Pragmatic Nationalism leverage US interest? Chinese Pragmatic Nationalism is a “passive-aggressive” strategy. But as more jobs are created from China, will they squeeze US FDI in China that could strain our manufacturing and services industry interest? The US and China’s love and hate relationship is a delicate arrangement and does not provide much incite long-term. Short-term Chinese OFDI can put America back to work.

 

 

 

References

China’s outward FDI in 2016 likely to exceed US$170 billion. (2016). CFO Innovation Asia, Retrieved from https://nuls.idm.oclc.org/login?url=https://search-proquestcom.nuls.idm.oclc.org/docview/1826012703?accountid=25320

China US two-way FDI reached all time high in 2016. (2017, May 18). BBC Monitoring Asia Pacific. Retrieved from https://nuls.idm.oclc.org/login?url=https://search-proquestcom.nuls.idm.oclc.org/docview/1899695078?accountid=25320

He, A. (2017, April 26). Chinese FDI in US tripled to $46 billion in 2016. China Daily. Retrieved from https://nuls.idm.oclc.org/login?url=https://search-proquestcom.nuls.idm.oclc.org/docview/1891742709?accountid=25320

Mazenda, A. & Masiya, T. (2021). BRIC bilateral direct foreign investment relations with South Africa: A Critical Review. Insight on Africa, 09750878211012881.

Porter, P. (2018). Why America’s grand strategy has not changed: Power, habit, and the US Foreign policy establishment. International Security42(4), 9-46.

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