Chinese foreign direct investment on U.S. shores grows significantly

Mary A. Burnham, practically a Dallas, Texas native (she moved there from Springfield, Ohio when she was five years old), understands the key ingredient in any business deal. A late starter, she was a stay-home mom before she ventured into trading with Fidelity Investments, then PetroQuest Energy. In 2013, Burnham struck out on her own and founded Burnham Green Oil, Inc. She brokers deals between buyers and sellers of various products, from No. 6 fuel oil, LPG and LNG, re-refined base oils and white oils.

Burnham was among the 200 or so Americans who joined the China-US Private Investment Summit in Austin, Texas, hoping to connect with the 50-strong Chinese delegation. Today, she is hoping to extend her business outside of the United States to China, the worldโ€™s largest lubricants market.

โ€œWe are looking to build business-life partnerships,โ€ she said, as her reason for attending.

Events such as this may have contributed to the recent growth in Chinese foreign direct investment (FDI) in American shores. Historically, FDI was a largely a one-way street, from the United States to China. However, a report released last week by a U.S.-based non-profit organization, the National Committee on U.S.-China Relations based in New York City, and Rhodium Group, an economic research firm also based in New York City, shows that Chinese investments in the U.S. have seen significant growth and most of this occurred in the last five years. The report projects that by 2020 the U.S. could be the recipient of between USD 100 billion and USD 200 billion of Chinese investments.

Historically, most of the FDI in the United States originated from Europe, with the United Kingdom, Germany, France and other European countries accounting for more than two-thirds of the total FDI as of 2013. Investors from Asia-Pacific account for 17%, largely due to the expansion of Japanese firms since the 1980s. In 2012, China accounted for only 0.3% of the total U.S. FDI of USD 175 billion or USD 525 million. However, in the past few years, China has become one of the fastest growing sources of FDI for the United States, the report says.

โ€œFrom 2000 to 2014, Chinese firms invested a combined USD 46 billion in greenfield establishments and acquisitions in the U.S., the bulk of it in the past five years,โ€ the report says.

The report breaks down Chinese FDI by U.S. Congressional District. Texas is one of the major recipients of Chinese FDI in the U.S., with more than USD 5.6 billion in Chinese investments from 2000 to 2014. Investments in the Houston area are primarily focused on energy. Nexen, a wholly owned subsidiary of China National Offshore Oil Corp. (CNOOC), has a large regional office in Houston and offshore oil assets in the Gulf of Mexico. The Dallas/Fort Worth metropolitan area is home to small- and medium-sized greenfield operations by Chinese companies, such as the Chinese telecom giant Huawei.

โ€œChina wants to put its money on U.S. soil and we want to put our brand over there,โ€ said Burnham.