• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Global Investors Prefer the United States, Not China

    Conventional wisdom has it that China’s growing economy poses a serious threat to America’s status as a global economic superpower. The media and politicians repeat time and again that the United States is losing much of its manufacturing base to China and that American jobs are disappearing as a result. Many Americans who believe these claims vote for politicians who promise to “protect” American jobs from foreign competition.

    A look at the numbers reveals that, contrary to the assertion that corporations prefer to invest in low-wage countries like China, the United States is the world’s strongest magnet for investment dollars. Look at recent trends in foreign direct investment (FDI), which measures investment in factories and other enterprises, as opposed to indirect investment in stocks and bonds.

    According to the World Bank, FDI in America has been higher than FDI in China every year except one since 1970. The exception was in 2005, when FDI in China for the year was about $4.57 billion more than FDI in America. Since then, foreign investors have funneled 54 percent more money to the United States than to China. China has received $759 billion in new FDI since 2005, while the United States has received nearly $1.17 trillion.

    In 2010, even as commentators complained about jobs being outsourced from the United States to China, foreign investors continued to favor the United States, pouring $236.2 billion into the U.S. economy—about 28 percent more than they sent to China.

    Although scary stories about U.S. jobs being outsourced to China continue to make headlines, these numbers reveal that international investors consistently prefer to send their job-creating dollars not to China, but to the United States.

    Charles Kaupke is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Economics [slideshow_deploy]

    3 Responses to Global Investors Prefer the United States, Not China

    1. Ray says:

      Sure? And Big Foot exists. Make belief never got anyone or a nation anywhere
      haha

    2. Behemot says:

      China simply do not allow many of hot capital to invest domestically do to capital account constraints.

    3. Behemot says:

      China has its own financing through about 13 trillion US dollars of domestic China savings (83 trillion RMB at 31.12.2011). FDI never substantiated more than 10% total.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×