ANNUAL REPORT

50
Figure 8: U.S. FDI Stock in China, 2008–2015
(cumulative, historical-cost basis)
US$ billions
80
70
60
50
40
30
20
10
0
2008 2009 2010 2011 2012 2013 2014 2015
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
This reflects broader inbound FDI trends in China: FDI flows
into China have slowed in recent years due to rising costs, concerns
over the foreign investment climate, expectations for further RMB
weakness, and competition from Southeast Asian countries. 108 Official
statistics from China’s Ministry of Commerce (MOFCOM) show
nonfinancial FDI in China reaching $117 billion (RMB 781.4 billion)
in 2015, a modest increase of 6.4 percent from 2014. 109 In the first
half of 2016, nonfinancial FDI rose 5.1 percent year-on-year to $69.4
billion; the service sector accounted for 70.4 percent of total FDI
during the period, reaching $48.9 billion. 110
Challenges for U.S. Companies in China
Market Access Restrictions
China’s restrictive investment regime has earned it the second-worst
rating on the Organisation for Economic Co-Operation
and Development’s (OECD) FDI Regulatory Restrictiveness Index *
every year since the index’s inception in 2010. 111 To protect domestic
industries, particularly those deemed strategic, China continues
to limit foreign investment in many sectors where the United States
maintains a competitive advantage, such as research and development
(R&D)-intensive and value-added sectors.† Despite high-level
* The OECD FDI Regulatory Restrictiveness Index includes both OECD economies and non-
OECD member economies and is based on four main indicators: “equity restrictions, screening
and approval requirements, restrictions on foreign key personnel, and other operational restrictions
(such as limits on purchase of land or on repatriation of profits and capital). The discriminatory
nature of measures is the central criterion to decide whether a measure should be scored.”
Blanka Kalinova, Angel Palerm, and Stephen Thomsen, “OECD’s FDI Restrictiveness Index: 2010
Update,” OECD Working Papers on International Investment 03 (2010): 6.
† For more on China’s foreign investment restrictions, see U.S.-China Economic Security Review
Commission, Chapter 1, Section 2, “Foreign Investment Climate in China,” in 2015 Annual Report
to Congress, November 2015.