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I Came, I Saw, I…Adapted -- An Empirical Study of Chinese Business Expansion in the U.S. and Its Legal and Policy Implications

67 Pages Posted: 25 Jul 2015 Last revised: 3 Feb 2016

Ji Li

Rutgers Law School

Date Written: July 24, 2015

Abstract

China's economic expansion into the United States has generated intense debates and controversies. Some view it as posing a critical challenge to extant U.S. institutions; others see China as a stakeholder of the extant system and that the Chinese investors are by and large “playing our game.” However, theories and hypotheses on the subject abounding, little is yet known how exactly Chinese investors interact with U.S. institutions and its legal implications. Relying on the first large-scale survey of Chinese companies investing in the United States, this article fills the gap with an interdisciplinary study of the adaptation of Chinese investors and their interactions with the U.S. legal and regulatory systems. Applying a novel theory of investor adaptation, the study finds evidence that Chinese investors are largely commercially driven and adaptive to the host country environment. The article further evaluates this general finding with a case study, i.e., Chinese companies’ adaptation to U.S. institutions governing employment discrimination, and finds confirming evidence. It then moves on to the discussion of two often-debated threats from China's business expansion in the United States: the threat to U.S. national security and the threat to free market capitalism. The empirical findings suggest that Chinese investors will unlikely pose existential threats to extant U.S. institutions in the near future. In light of the findings, policymakers should resist the temptation to hastily erect protective measures in response to the sharp rise of Chinese investments. Regulated properly, Chinese investors may become major stakeholders of extant U.S. institutions and contribute to their long-term resilience.

Keywords: Chinese foreign direct investment, chinese investment in US, CFIUS review, employment protection law, state capitalism, state-owned enterprise

Suggested Citation

Li, Ji, I Came, I Saw, I…Adapted -- An Empirical Study of Chinese Business Expansion in the U.S. and Its Legal and Policy Implications (July 24, 2015). 36 Northwestern Journal of International Law & Business 143-205 (2016). Available at SSRN: https://ssrn.com/abstract=2635571

Ji Li (Contact Author)

Rutgers Law School ( email )

123 WASHINGTON STREET
Newark, NJ NEW JERSEY 07102
United States

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