Chinese Direct Investment in California

California is at the forefront of China’s beginning investment boom in the United States. The Golden State attracted 156 deals from 2000 to 2011, one quarter of all Chinese investments in the United States in this period. With its long history with China, the most sizable Chinese American population in the country, and more inward investment deals from China than any other state, California is in a position to lead the nation in attracting Chinese investment in the decade to come.

Those flows would bolster employment, feed the tax base, generate exports, and bring positive spillovers of know-how and relationships. However, these benefits are not foreordained. Competitors for these dollars are ramping up efforts to attract Chinese firms, and they could well out-compete California if the state fails to resolve its fiscal and political problems, provide attractive terms to Chinese firms, and demonstrate its readiness to stand up for Chinese investors and address OFDI impediments at the national level.

To build the case for a robust response to these opportunities and looming risks, this report analyzes Chinese investment in California in depth, mining a unique database for insights about California’s comparative advantages, the Chinese firms most suited to its economy, and the forces motivating this inflection in cross-border investment patterns. The report explains where China is as an outbound investor relative to its past, its future, and other countries and assess California’s position as a destination for Chinese OFDI flows compared to its sister states.

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