* New Neighbors: 2016 Update Chinese Investment in the United States by Congressional District A Report by the National Committee on U.S.-China Relations April 2016 and Rhodium Group The map on the cover page depicts the cumulative value of Chinese FDI transactions from 2000 to 2015 in each of the 435 districts of the 114th United States Congress. See Figure 4 for more information. New Neighbors: 2016 Update Chinese Investment in the United States by Congressional District April 2016 A Report by the National Committee on U.S.-China Relations and Rhodium Group www.ncuscr.org/fdi © 2016 National Committee on U.S.-China Relations About this Report About the National Committee on U.S.-China Relations The National Committee on United States-China Relations (NCUSCR) is a private, nonpartisan, American non-profit organization that promotes understanding and cooperation between the United States and Greater China in the belief that sound and productive Sino-American relations serve vital American and world interests. Since its founding in 1966, the Committee has created opportunities for informed discussion and reasoned debate about issues of common interest and concern to the United States, Mainland China, Hong Kong and Taiwan. NCUSCR currently organizes programs for private and public sector participants on politics and security, governance and civil society, economics and finance, education, and transnational issues such as energy and environment. It carries out its mission via conferences and forums, public education programs, professional exchanges and collaborative projects. About Rhodium Group Rhodium Group (RHG) is an economic research firm that combines policy experience, quantitative economic tools and on-the-ground research to analyze disruptive global trends. It supports the investment management, strategic planning and policy needs of clients in the financial, corporate, non-profit, and government sectors. RHG has offices in New York, California and Washington, and associates in Shanghai and New Delhi. RHG’s cross-border investment practice analyzes the rise of China and other emerging markets as trans-national investors. RHG senior staffs publish frequently on the growth and impact of Chinese outbound FDI in the United States, and maintain the China Investment Monitor, a unique database tracking Chinese investment in the US economy. Supported by: Contents Foreword .................................................................................................................... 1 1. Chinese Investment Trends in 2015 ........................................................................... 2 2. Mapping the US Operations of Chinese Companies ................................................... 8 2.1 The Northeast .............................................................................................................. 9 2.2 The Midwest ............................................................................................................... 18 2.3 The South ................................................................................................................... 31 2.4 The West .................................................................................................................... 44 References ................................................................................................................ 53 Data Appendix .......................................................................................................... 55 Methodology ................................................................................................................... 55 Detailed Data ................................................................................................................... 57 Foreword As the National Committee on U.S.-China Relations households missed out on hundreds of millions of dollars celebrates our fiftieth anniversary, we reflect on how in additional payouts. much deeper, more important and complex the Sino- American relationship has grown in each successive The United States remains the world’s most innovative decade of our existence. Our work with NGOs, economy and attractive investment destination, and policymakers, business leaders, and educators has Chinese companies are taking notice. Chinese investors expanded beyond anything our founders could have are drawn to our shores in greater and greater numbers imagined. because of our innovation clusters, IPR protection, and highly educated and motivated talent pools. They also From the moment the National Committee hosted the see the value in getting closer to their customers, as Chinese ping-pong team in 1972 – as part of the historic evidenced by companies like Fuyao Glass, the largest Ping-Pong Diplomacy that led to the restoration of auto glass manufacturer in the world, building facilities diplomatic relations after nearly 30 years – our in Moraine, Ohio, and Decatur, Illinois, to serve the organization became a major bridge for people-to-people domestic market. exchange. With the publication of New Neighbors: 2016 Update, we are pleased to highlight a relatively new and With a record-setting 2.56 million outbound trips from increasingly important bridge: the rapid growth of China to the United States last year – a number that is Chinese investment in the United States. poised to double by 2020 – Chinese companies are investing heavily in the U.S. hospitality and travel After China’s opening up in 1979, the people-to-people logistics sector to meet this growth. In addition, major contact fostered by US companies making investments in new investments in energy and entertainment in 2015 China strengthened our mutual understanding. I had the show Chinese investment facilitating the export of privilege of helping build those bridges as a young lawyer American goods and services to China. living in China. Last year was a record year for Chinese investment in the Today’s Chinese investment in the United States gives us United States, with more than $15 billion in transactions. a fresh opportunity to learn about one another, and it is That record is on course to be shattered in 2016, with over already having profound effects on the lives of $30 billion in pending deals and projects announced in Americans. While much of this year’s political campaign just the first quarter. As Chinese investment continues to rhetoric has focused on jobs leaving the United States, accelerate, the National Committee on U.S.-China Chinese investment is supporting more and more jobs on Relations is confident that this updated New Neighbors this side of the Pacific – over 90,000 and growing. report will help American citizens and leaders at the national, regional, and local levels better understand the It is also worth noting what Chinese investment does for impact of Chinese investments on their communities. asset prices in the United States and who benefits from those increased asset prices and distributions. When a Chinese company pays top dollar to acquire a public US company, the US company’s shareholders generally Stephen A. Orlins receive cash in excess of the stock price. Given that the President, National Committee on U.S.-China Relations largest owners of US stocks are American pension funds and households, it follows that the purchase benefits accrue primarily to American retirees and households. Conversely, when a Chinese acquisition is rejected and a lower bid is accepted, these same people receive less money for their retirements and lives. In the most famous example, in 2005, the lower offer that Union Oil Company of California (UNOCAL) accepted from Chevron rather than China National Offshore Oil Corporation (CNOOC) meant that American retirees and NEW NEIGHBORS 1 1. Chinese Investment Trends Last year’s “New Neighbors” report for the first time Acquisitions still dominate but greenfield FDI surges provided a detailed tally of the operations of Chinese- affiliated companies in the United States and the local Mergers and acquisitions (M&A) continue to be the impacts of those investments. This update reviews preferred entry mode for Chinese investors in the US China’s US investments in 2015 and describes how they market as they seek fast growth. For the second year in a have affected the footprint of Chinese companies in each row, Chinese companies completed more than 100 M&A region, state, and congressional district. deals in the US, totaling $13.5 billion. The biggest transactions were Fosun’s purchase of Ironshore Chinese investment in acquisitions, new operations, and Insurance ($2.4 billion), Anbang’s acquisition of the expansions in the US grew to more than $15 billion in Waldorf Astoria hotel in New York ($1.95 billion), Yantai 2015, setting a new record. The number of Chinese- Xinchao’s investment in Texas oil fields ($1.3 billion), and affiliated companies in the US exceeded 1,900 by year- a consortium’s purchase of semiconductor firm end, extending across more than 80% of congressional Integrated Silicon Solutions ($800 million). districts (362 of 435). As greenfield foreign direct investment (FDI) picked up and many existing Figure 1: Chinese FDI Transactions in the US by Entry Mode companies expanded local employment, the number of Number of deals, USD million Americans employed by Chinese-affiliated companies Value of Acquisitions (Right Axis) 16,000 100 rose by another 12% to 90,000. Value of Greenfield Projects (Right Axis) 14,000 Number of Greenfield Projects (Left Axis) 12,000 80 Number of Acquisitions (Left