Chinese Companies in U.S. High-Tech Sectors

• Main Author: Margarita Konstantinovna Perova
• Format: Article
• Language: Russian
• Published: Economic Research Institute of the Far East Branch of the Russian Academy of Sciences 2020-10-01
• Series: Prostranstvennaâ Èkonomika
• Subjects: oreign direct investment; chinese companies; high-tech industries; competitiveness; national security; technology transfer; profit; mergers and acquisitions; strategy; usa
• Online Access: http://spatial-economics.com/eng/arkhiv-nomerov/2020-3/972-

Over recent years a new wave of ChinaТs direct investments in the U.S. high-tech sectors has attracted great attention. These investments are crucially important as the sector is a major asset to both competitiveness of the economy and national security. The article analyzes the factors driving ChinaТs investment activity abroad and also the main components of the strategy implemented by the national companies. ChinaТs growing foreign direct investment/FDI has been driven mostly by the deterioration in the domestic operating environment, a more open policy for outward FDI and also the facilitating role of the state. Motivated by the acquisition of technology, Chinese companies have significantly increased their investments in the U.S. high-tech industries (ICT, health care and biotechnology, automotive and energy sectors). But the main goal of Chinese investors is not generating profit that would have corresponded to the market economy. Investment is one of the means for China to accomplish its technology transfer goals. In response to macroeconomic pressure in 2017 China abandoned plans to liberalize its capital account and is now exercising tight oversight of outbound investment flows. US legislative measures adopted by the Foreign Investment Risk Review Modernization Act of 2018, the Export Control Reform Act of 2018 and tariffs impacted negatively on ChinаТs investment in the U.S. economy. The potential for Chinese outbound investment growth remains large, but the political uncertainty in both countries hinders its realization