2011 report to congress - U.S.-China Economic and Security Review ...

56Table 2: China’s Foreign Direct Investment in the United States, 2003–2010(U.S. $ million)2003 2004 2005 2006 2007 2008 2009 2010Flow 65.05 119.93 231.82 198.34 195.73 462.03 908.74 1308.29Stock 502.32 665.20 822.68 1,237.87 1,880.53 2,389.90 3,338.42 4,873.99Source: Ministry of Commerce of the People’s Republic of China, 2010 Statistical Bulletin ofChina’s Outward Foreign Direct Investment (Beijing, China: 2011).Chinese overall nonbond investment has been very limited in theUnited States to date. China’s Ministry of Commerce estimatedthat in 2010, cumulative Chinese FDI in the United States was$4.9 billion (see table 2, above). According to the U.S. Bureau ofEconomic Analysis, the cumulative level of Chinese FDI in theUnited States through the end of 2010 was $3.2 billion on a historical-cost(or book value) basis. According to the bureau, in 2009,China ranked as the 34th largest source of cumulative FDI in theUnited States. By comparison, China’s investments in U.S. Treasurysecurities were an estimated $1.2 trillion by July 2011, makingChina the biggest foreign holder. 181Several analysts note that China often uses offshore locations(such as Hong Kong or tax havens) to invest in other countries.China also uses London exchanges to buy U.S. Treasuries, in whichcase the investment is registered as being from the United Kingdom.The Bureau of Economic Analysis also reports cumulativeFDI data according to the country of ultimate beneficial owner,which puts Chinese FDI in the United States through 2010 at $5.9billion (see figure 1, below).*dkrause on DSKHT7XVN1PROD with $$_JOB* The Bureau of Economic Analysis tracks geographic distribution of FDI in two forms: countryof direct foreign parent, which attributes each investment to the direct parent company, andcountry of ultimate beneficiary owner, which tracks the investment to the country of the ultimateowner. The latter method generally is considered more accurate, as a large share of FDItransactions today are conducted through special-purpose vehicles in third countries. In thiscase, the $5.9 billion figure represents the Chinese FDI in the United States in 2010 on theultimate beneficiary owner basis. On the country of foreign parent basis, the cumulative ChineseFDI in the United States was $3.2 billion by the end of 2010. For further information, see DanielH. Rosen and Thilo Hanemann, An American Open Door? Maximizing the Benefits of ChineseForeign Direct Investment (New York, NY: Asia Society Special Report, May 2011), pp. 81–88.For data, see U.S. Bureau of Economic Analysis, ‘‘Historical-Cost Foreign Direct Investment Positionin the United States and Income Without Current-Cost Adjustment, by Country of Foreign-Parent-GroupMember and of the Ultimate Beneficial Owner, 2002–2010’’ (Washington, DC:U.S. Department of Commerce). http://www.bea.gov/international/di1fdibal.htm.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00068 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464