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The Benefits of Chinese FDI

BERKELEY – In a rare act of bipartisanship, the United States Congress recently passed legislation to encourage more inward foreign direct investment. Democrats and Republicans agree that FDI, or “insourcing,” is important to US jobs and competitiveness. They are right.

But, even as they propose new measures to court foreign investors, many members of Congress in both parties harbor deep concerns about FDI from China, on both national-security and economic grounds. These concerns are unwarranted, and discriminatory policies to restrict such investment are ill-advised.

The US government already has adequate controls in place to review and block FDI from all countries, including China, that pose anti-competitive and national-security risks. Investments that clear these controls benefit the US economy in numerous ways and should be welcomed.

Foreign-owned firms in the US account for 5% of private-sector employment, 17% of manufacturing jobs, 21% of exports, 14% of research and development, and 17% of corporate-income taxes. Recognizing FDI’s significant contributions to the US economy, President Barack Obama’s Council on Jobs and Competitiveness endorsed the administration’s new Select USA program to coordinate government-wide efforts to promote it.