"Once hardly noticeable, Chinese investments in U.S. companies are now rising sharply. Cumulative Chinese investments in U.S. companies remain modest compared to those of other major countries. However, a combination of 'push and pull' factors are moving China's annual investment levels closer to levels consistent with China's current economic stature. First, the Chinese government has made a conscious decision to diversify its foreign currency assets into hard assets. This has led to the creation of sovereign wealth funds that make portfolio investments in U.S. equities, private firms, and real estate. Second, the Chinese government has altered its policy guidance toward foreign direct investment (FDI). Whereas it previously encouraged investments almost exclusively toward energy and resource acquisition in developing countries, it now also encourages investments in advanced countries. The government's goals for these investments include securing energy and mineral resources and acquiring advanced technologies in industries where China wishes to leapfrog existing competitors. Third, U.S. state governments and, to a lesser extent, the federal government are vigorously trying to attract Chinese greenfield investments in the hope of creating jobs and jump-starting local economies. Fourth, Chinese investments are being drawn to the United States by the availability of financially weak firms, some of which possess potentially useful technologies for China. Fifth, some firms that are already competitive with U.S. producers are investing to enhance their U.S. market shares or in response to trade remedies proceedings against unfair trade practices, such as Chinese subsidies."
U.S.-China Economic Security Review Commission: http://www.uscc.gov/