BF-FieldManual-FEB13 -3.pdf - Bertelsmann Foundation

in millions of USDUS-China Bilateral Trade & Investment Relationship450,000400,000350,000300,000250,000200,000150,000100,00050,0000EU-China Bilateral Trade & Investment Relationship400,000350,000300,0002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011US imports from ChinaChinese imports from USUS FDI in ChinaChinese FDI in USSources: US Census Bureau: Foreign Trade; BEA: Foreign Direct Investmentnegotiations for an indication of theconditions a post-Lisbon EU will requireand what sort of investment relationshipthe Chinese will accept. China alreadyhas BITs with 26 of the 27 EU memberstates, and the market for Chinese FDIin Europe is already relatively open.A pan-European BIT could tidy up thelegal climate for Chinese investors inEurope and perhaps extend to coverlarge individual investors.Second, while most Chinese FDI iseconomically beneficial and politicallyneutral, the US and EU shouldconsult on its nature in sensitive andstrategic sectors. 13 The two sides couldundertake a frank and open dialogueon the procedures and decision-makingapproval of the Committee on ForeignInvestment in the US (CFIUS) and otherbodies regulating inbound FDI into theUS. Openness has been the guidinglight in European investment strategy,with only three countries having limitson investment for national security instrategic sectors. The eurozone crisis andprivatization conditions championed bythe lending troika have augmented thepotential role of Chinese investment inEurope. For instance, the Chinese seempoised to enter into global bankingprimarily through M&A with undervaluedEuropean banks. Investments insensitive national security areas mightrequire consideration in light of the US’son-the-ground role in NATO.in millions of USD250,000200,000150,000100,00050,000Third, the trans-Atlantic partners shouldconsider the potential implications ofasymmetric market access and disclosurerequirements in China. This has alreadybegun and should be broadened. The twoshould jointly encourage China to clarifythe opaque management structure ofChinese state-owned enterprises, someof which are seeking to expand theiractivities in the US and EU.02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011EU imports from ChinaEU exports to ChinaEU FDI in ChinaChinese FDI in EUSources: Eurostat, International Trade; Eurostat, Balance of Payments*2011 EU-China FDI data was not yet published as this went to printThis dialogue should include a jointassessment on conditions for an openand reciprocal procurement marketin China, a potential jewel for US andEuropean industries but one to whichaccess is limited and subject to heavypolitical intervention. Access itself has7 4China