{
  "id": "RL31749",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL31749",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 101520,
      "date": "2003-02-14",
      "retrieved": "2016-04-08T14:53:05.231544",
      "title": "Foreign Direct Investment in China",
      "summary": "This report provides an overview of global Foreign Direct Investment in the People's Republic\nof\nChina, examines its effects on the Chinese economy, surveys U.S. FDI in China, and includes a\ndiscussion of policy implications for the United States. China, by far, is the largest recipient of FDI\namong emerging economies with an inflow of $52.7 billion in 2002 and 424,196 foreign-affiliated\nfirms operating in China representing paid-in foreign investment of $448.0 billion. These firms\naccount for about half of China's exports and imports. Nearly 1,500 U.S. companies from 41 states\nhave direct investments of $10 to $34 billion in China.\n  For the U.S. Congress, foreign direct investment in China entails both oversight and regulatory\nissues. Some questions with respect to this investment are: (1) the extent to which FDI is\ncontributing to China's economic growth and technology development, (2) the extent to which U.S.\nFDI in China is contributing to the U.S. trade deficit, (3) whether FDI inflows into China come at\nthe expense of flows into other countries, (4) how FDI is affecting security concerns, and (5) whether\nFDI affects the export of sensitive technology to China. \n  Foreign direct investment has contributed about 13 % to China's economic growth, and most\nof China's modern technology, particularly in electronics, has been imported. With respect to trade,\nthere is little doubt that the large surplus in China's trade has been generated largely by the surge in\nits exports of foreign brand-name manufactures often made in foreign-affiliated factories. As much\nas 80 to 90% of certain high technology exports originate from foreign affiliated firms there. In\nterms of the U.S. trade deficit with China, American companies there do export some of their output\nback to the American market, but most is sold in China. China has been attracting some FDI flows\nthat otherwise could have gone to other developing countries. In essence, China's gain may be their\nloss.\n  In terms of security, the $20 to $34 billion in U.S. FDI in China combined with $68 billion\n from\nTaiwan, and some $300 billion from elsewhere is changing the calculus for hostilities and creating\ngroups with a strong interest in stability both within China and between China and the United States,\nTaiwan, and other potential adversaries. Foreign direct investment in China affects security\nprimarily through three avenues: its contribution to economic power, economic interests, and \ntechnology transfers. The more China grows, the more funds it is able to provide to its military and\nattain big-power status in the world. With respect to economic interests, foreign companies in China\ncan serve both as hostages for Beijing and important pressure groups that can pursue their interests\nin maintaining stability with both Beijing and their home governments. With respect to sensitive\ntechnologies, in the U.S. case, it does not appear that prohibited U.S. technologies have been\ntransferred through foreign affiliated companies, although the technologies in the electronics and\naviation industries that have been transferred do have dual civilian and military uses. Such transfers\nare controlled by export control regimes. The highly publicized cases of satellite technology being\nallegedly illegally transferred to China involved direct transfers from U.S. corporations to Chinese\ncompanies. This report will be updated as circumstances warrant.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
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      "topics": []
    }
  ],
  "topics": [
    "Economic Policy"
  ]
}