Foreign Direct Investment Regulations under the US-China Conflict: Developments in the US Congress

As the US-China confrontation continues to escalate, a critical political issue revolves around whether the two deeply interdependent economies should proceed with the decoupling of their economic systems. This paper aims to explore the perspectives of US Congress members concerning economic relations with China, focusing on the case study of foreign direct investment (FDI) restrictions. It seeks to uncover the underlying political and economic factors that influence these attitudes.

Within the US Congress, there has been a growing chorus of voices advocating for a tough stance against China, spanning across both Republican and Democratic parties. Consequently, there has been a tightening of restrictions on inward FDI from China, alongside new efforts to limit outward FDI to China. However, it is crucial to recognize that such measures could potentially have adverse effects on the US economy, and as a result, significant opposition from various industries has emerged. This paper aims to analyze the motivations that driving legislators to pursue these policies.