From the Background: "Investment is playing a growing role in U.S. commercial ties with the People's Republic of China (PRC or China). For many years, the PRC government invested much of its foreign exchange reserves in U.S. assets, particularly U.S. Treasury securities. China is the world's largest holder of foreign exchange reserves and had $3.2 trillion in reserves as of November 2020. [...] Since 1999, the PRC government has pushed an outward investment policy that has sought to diversify its overseas investments into hard assets by encouraging its companies--many of them state-tied firms--to invest overseas. These investments have targeted gaining access to critical raw materials and cutting-edge technology and establishing an overseas presence to expand infrastructure and create markets for Chinese goods and services. While a significant share of China's investment in the United States is in U.S. public and private securities, U.S. capital flowing into China largely has taken the form of foreign direct investment (FDI), in part due to China's restrictions on portfolio investment and investment rules that tie sales and procurement requirements or incentives to an investment or manufacturing presence. Initial U.S. investment in China focused on export-oriented manufacturing. Since the 1990s, U.S. investment has expanded into manufacturing, distribution, and services for the domestic market as well. In recent years, China has also sought to open gradually certain participation in its capital and debt markets to foreign investors."
CRS In Focus, IF11283
Congressional Research Service: https://crsreports.congress.gov/