Friday, October 4, 2013

Chinese foreign direct investments in the US and beyond: a closer look

Written by Aveek Sarker, Student Fellow at the Carl Vinson Institute of Government

As a Fellow this semester at the Carl Vinson Institute of Government's International Center, I have the rare opportunity to pick the brain of my faculty mentor, Rusty Brooks. His intellectual interests, much of which are concerned with the rise of China as this era's preeminent and rising economic superpower, align well with my own, as I have decided to investigate certain implications of Chinese foreign direct investments in the United States and across the world. 

The last decade has seen the rise of a new world power as China's unprecedented economic growth and development has radically altered the global landscape. One of the most significant trends that will largely influence the trajectory of the Sino-American relationship has just recently begun to materialize. 

China has started to take an increasingly proactive role in seeking to invest in ventures abroad through mergers, acquisitions and greenfield investments. If current patterns continue, more than $1 trillion of direct Chinese investment will flow worldwide by the year 2020, a significant share of which will be headed for advanced markets such as the U.S. How the U.S. responds to these flows will  not only serve to determine the future of its own economy, but more importantly will have considerable influence over the diplomatic relationship it seeks to establish with the world's fastest-growing economy. 

Anxieties and fears of strategic maneuvering certainly exist as China begins to move into American markets. It is upon these anxieties that I hope to further build upon my present analyses. As I continue investigating, I will interpret specific investment deals involving Chinese firms to assess the direct implications of their investments on a case-by-case basis. 

The case of the China National Offshore Oil Corporation (CNOOC) is of particular interest. Moving forward, I intend to make a comparative analysis between CNOOC's failed bid for Unocal, a California-based oil company in 2005, that was struck down my U.S. government, and compare it to the company's subsequent and successful acquisition of the Canadian shale oil and gas giant Nexgen just six years later. 

Why was one deal successful and the other wasn't? What changes were made in between? And how do these deals serve as case studies for future Chinese investments in the Americas?

These are just some of the questions that will be further explored in later posts. 

Students interested in state and local government can gain valuable experience and prepare for careers in public service through the Vinson Institute Fellows Program. This semester-long internship with the Carl Vinson Institute of Government introduces undergraduate students to the inner workings of state and local government, both in Georgia and abroad.