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Chinese Direct Investment in the U.S. Energy Economy

See also: Current Patterns and Future Opportunities: Mapping Chinese Direct Investment in the U.S. Energy Economy by Melanie Hart

Chinese companies are building solar farms, wind farms, electric vehicle manufacturing plants, and other greenfield energy projects across the United States. They are also investing in existing U.S. energy companies and, in some cases, saving those companies from bankruptcy. State governors and city mayors across the nation have gone to great lengths to bring in these investment deals so that local residents can benefit from new employment opportunities and new energy infrastructure.

The Center for American Progress tracked Chinese direct investment activity in the U.S. energy economy to identify current growth areas and highlight where assistance may be needed to expand that growth in the future. CAP found that some of these projects are clustered geographically in U.S. states or regions with particular comparative advantages:

  • Most fossil fuel investments are based on geology—where oil and gas plays are most active, Chinese firms are interested in acquiring a share of the production profits.
  • Clean energy investments are much more likely to chase good policy. Due to strong state policy programs, Texas is a top destination for wind investments, New Jersey is a top destination for solar, and California is a top destination across multiple renewable energy sectors.

Not every state has fossil fuel resources, but all U.S. states have the ability to develop and produce renewable energy. The business case for doing so is heavily influenced by state policy. Where states formulate good policy, investment will follow, including foreign direct investment from China and other nations.

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Melanie Hart is the Director for China Policy at the Center for American Progress. Angela Luh was previously an intern at the Center.