Now, we're at this other inflection point, where the investment is starting to flow out of China --part of the "going out" policy -- and as companies accumulate
capital and move up the value chain, they don't want to just buy a coal mine or an iron mine. They want a brand, they want to be in manufacturing or
information systems, and so we're beginning to see this change.
I think America is not ready for it. I think we've not really thought about it particularly thoroughly because we never have had to think about getting
investment. The truth is now that we both need new sources of investment and China is the most logical, promising place from which more of those capital
flows will come.
This is something that is going to have a profound impact on U.S.-China relations. Today, China's foreign direct investment in the United States is very
small -- on the same level as New Zealand, Denmark. But in some of the work we've done here at the Asia Society, we estimate that there's a
potential of from $1 trillion to $2 trillion that will be trying to exit China. The question is, where is it going to go.
This is an area on which we need to concentrate more, because it actually is a win-win proposition. You go to China and there's a tremendous amount of
uncertainty about whether this investment is welcome. That largely grows out of several cases -- the Unocal case, ZTE, Huawei. There is a review process, but
you should all know that the only grounds on which the United States can reject foreign investment is national security grounds -- extremely narrow. There are
very few investments that get turned down. America is one of the most open economies in the world to foreign investment, but that is not always the perception.
If we are talking about marriages between foreign policy, bilateral relationships and economics, this is one which is going to deserve our attention going
We don't want to have too rosy-eyed a picture. There's a lot of history between the U.S. and China. It has made our relations difficult. They continue to
be difficult at times, despite an understanding of a greater common interest, we sometimes have a difficult time digging down to it. Things get in the way
and it is the unpleasant job of governments, of course, to deal with all the problems that are very difficult to solve. Trade and business can sometimes
have a more felicitous relationship and I think there's also a role for cultural exchange and other kinds of exchange that are not so fraught with tension.
As I look at the horizon, I'm particularly gratified to hear that President Xi is not only coming to the United States, but he's not, God bless him, going
to Washington. I think that he's evinced a tremendous wisdom. If he went to Washington, he'd be immediately trapped in arguments over state dinners, 21-gun
salutes and all of the protocol issues that essentially go nowhere.
So, where's he going? He's going to Los Angeles. He's going to Walter Annenberg's estate. Nice golf course, tennis courts, swimming pool -- no neckties
needed. And, hopefully, he and President Obama will be able to get down to business, to try to dig down to some of these clouding issues to these basic
common interests. It doesn't matter what you think, the U.S. and China have to get along, and so we have to get down to that kind of bedrock.