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A public policy blog from AEI
Chinese investment in the US more than doubled its total from 2015 to 2016, reaching about $50 billion. While New York and California historically receive the largest portion of Chinese investment, last year saw large M&A deals that put states like Illinois and Kentucky on the map as well.
With the surge of Chinese investment in the US and the ongoing policy debate about how to regulate it, including the security concerns tied to CFIUS (the body charged with ensuring that foreign acquisitions do not pose a substantial risk to American national security) reform, it’s useful to know where Chinese investment is concentrated and what shape their assets take. It is also valuable information, of course, for elected representatives at the federal and state level.
Looking below the state level, AEI’s Chinese investment in the US by Congressional District dataset shows the following as the top recipients since 2005 (the year when China first invested a large sum).
New York-12 & -10 ($27.4 billion & $6 billion, respectively)
Historically, New York has boasted the largest amount of Chinese investment among the 50 states with $44.5 billion. Chinese investment in New York has focused on real estate and financial acquisitions. The majority of this investment resides in NY Districts 10 and 12, under Democratic representatives Jerrold Nadler and Carolyn Maloney, respectively. While finance and real state still dominate New York acquisitions, investment in tourism soared, propelled by a $6.5 billion acquisition by privately-owned HNA Group of 25% of Hilton Hotels from Blackstone. Across the US, investment in tourism led as the fastest growing sector in 2016, growing almost forty times from $420m in 2015 to $15.3 billion in 2016.
California-12 ($5.5 billion)
California led all states in drawing Chinese investment in 2016. Investment per district, however, is less highly concentrated than in New York. CA-12, represented by Democrat Nancy Pelosi, boasts $5.6 billion in Chinese investment since 2007, with a focus on technology and real estate. Before the second quarter of 2016 no deal in CA-12 had surpassed $600m, with transaction value averaging around $240m. A large acquisition by Orient Securities in September 2016 for $1.4 billion shook this trend.
Illinois-7 ($10.9 billion)
Leading the Midwest in Chinese investment, IL-7 represented by Democrat Danny Davis has received $10.9 billion in deals since 2010. China’s track record in Chicago sees large acquisitions in multiple sectors – real estate, technology, and tourism. IL-7 accounts for one-third of the growth in the tourism sector this year based on the location of Anbang’s $5.72 billion acquisition of a Blackstone hotel portfolio.
VA-3 & 4 ($9.2 billion)
In 2013, privately-owned Shuanghui made a $7.1 billion, including debt, acquisition of Smithfield Foods then in Virginia’s 4th district under Republican Randy Forbes. This made Virginia one of the top recipients of Chinese investment and it is still ranked 3rd among the states. Investing in agriculture is strategic for Chinese companies who want to supply their home market by using American food resources and to learn about US agricultural practices.
Kentucky 3 & 6 ($5.3 billion & $3.4 billion)
Kentucky went from 0 to $8.8 billion in just one year. The growth is due to two large acquisitions in the consumer and technology sectors. In KY-3, represented by Democrat John A. Yarmuth, privately-owned Haier acquired General Electric Appliances for $5.4 billion. Zhuhai Seine Technology and Legend paid $3.4 billion for Lexmark, headquartered in KY-6, represented by Andy Barr.
California 45 ($6 billion)
A new California district was embraced by Chinese investors last year. CA-45, represented by Republican Mimi Walters jumped to the fore with HNA Group’s $6 billion acquisition of Ingram Micro. Technology is the largest draw for Chinese investment in California, followed by entertainment.
As the number of districts that receive Chinese investment, either new districts within states that are already recipients of Chinese investment as in California or new states like Kentucky, the number of participants in the policy debate over how to respond to Chinese investment also broadens. Washington is focused on a new administration and Congress and how they might change policies regarding Chinese investment. But an increasing number of local governments are going to want their say.
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