Trends in U.S. Multinational Enterprise Activity in China, 2000–2017
The
report analyzes nearly two decades of data compiled by the Bureau of
Economic Analysis to profile U.S. commercial activity in China. It finds
that the vast expansion of U.S. multinational enterprise (MNE) activity
in China may challenge U.S. industrial competitiveness and long-term
tech leadership. Since 2000, U.S. companies’ operations in China have
been among the fastest growing globally for all foreign subsidiaries,
with total U.S. commercial assets in China surging 15-fold. The rapid
evolution of U.S. business operations in China away from
manufacturing and toward higher value-added activity such as research
and development, often coerced by Beijing, increases the risk that U.S.
firms are unwittingly enabling China to achieve its industrial policy
objectives.
Further highlights include:
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U.S. MNEs employ more people in China than in any other country outside of the United States,
primarily in the assembly of computers and electronic products. As of
2017, U.S. MNEs employed 1.7 million people in China, a 574.6 percent
increase since 2000.
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China is the 4th-largest destination for U.S. MNE R&D expenditure, and increasingly competes with advanced economies in serving as a key research hub for U.S. MNEs.
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U.S. companies’ capital expenditure in China has focused on the creation of production sites for products like semiconductors, a strategically important electronic component.
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Issues for Congress to consider: (1) U.S.
competitiveness and leadership, especially around R&D and funding;
(2) the impact of shocks to China’s economy and Beijing’s policies on
the commercial health of U.S. businesses operating in China; (3) supply
chain diversification; and (4) inadvertent U.S. commercial advancement
of China’s military development.
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