Chinese Investment & Economic Development in the U.S. - Legal & Policy Issues.

Abstract

As a result of the 2008 global financial crisis and the Great Recession, states are confronting fierce fiscal challenges and the job market is weak. In addition, the U.S. economy is not recovering as it has in past economic downturns. The possibility of a double-dip recession is becoming more of a harsh reality. In response to these increasingly bleak prospects, states have become more aggressive in the global marketplace. The federal government is becoming more supportive of states as they expand their international economic development efforts. Along with President Obama’s revived export push, his newer international investment initiatives are reaffirming traditional U.S. open investment policies. These policies intend to remove regulatory uncertainties restricting foreign direct investment (FDI) in the U.S.

What should states and the federal government do to promote FDI and economic development given growing concerns over national security? What are the legal and policy issues?

After assessing the legal and policy issues concerning Chinese investment in the U.S., I have several suggestions. First, states need to follow an aggressive economic development policy focusing on attracting Chinese and other FDI. States ought to assess their business and regulatory environments to ensure equal treatment for foreign corporations. Second, the federal government ought to remove unnecessary legislative and regulatory barriers to foreign investment in the name of national security that promotes protectionism. It should adopt a systematic and aggressive policy of promoting FDI. The federal government should also promote greater use of bilateral investment and tax treaties to encourage greater foreign investment. Foreign corporations and sovereign wealth funds have the money and desire to invest in the U.S., which is good for the U.S. job market.

Keywords: international investment, China, China investment, state economic development, investment law, economic development, jobs, international trade policy, international trade