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Huge jump: Chinese companies invest record $46 billion in U.S.

Staff Writer |
Chinese companies invested a record $46 billion in the United States in 2016, triple the amount seen in 2015 and a tenfold increase compared to just five years ago.

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This is according to a report jointly released by the Rhodium Group and the National Committee on U.S.-China Relations (NCUSCR).

The huge jump in total Chinese investment last year is attributable to a greater number of mega acquisition deals, while the scale of greenfield projects remained comparatively small, the report said.

Such large acquisitions by Chinese companies include HNA Group's purchase of US technology group Ingram Micro for $6 billion, Qingdao Haier's acquisition of appliance business from General Electric (GE) for $5.6 billion, and Anbang Insurance Group's purchase of 15 properties from Strategic Hotels for $5.5 billion.

"While megadeals of this scale are unlikely to become the norm, the GE Appliances transaction shows that moving closer to US and global customers through brands and local presence is an increasing commercial rationale for Chinese firms," the report said.

In contrast to the dominance of fossil fuel investments before 2013, more than 90 percent of Chinese direct investment in 2016 focused on services and advanced manufacturing, according to the report, reflecting China's growing appetite for high-quality investment to meet the growing domestic consumption demand.

More specifically, real estate and hospitality, information and communications technology, entertainment, consumer products and financial services stood out as primary targeted industries for Chinese investors.

Chinese investment in US real estate and hospitality reached a record high of $17 billion last year, making it the top sector by cumulative Chinese investment, the report said.

Meanwhile, the US entertainment industry has become a significant recipient of Chinese capital since 2012. Investors targeted existing assets in Hollywood, trying to connect the world's largest film production and distribution industry with its largest potential market, the report said.

Last year, one of the largest deals was the purchase of Legendary Entertainment by Dalian Wanda for $3.5 billion.

While US transport and infrastructure received the least investment from China of all sectors from 2000 to 2015, it became the second largest sector for Chinese investors in 2016, according to the report.

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