Beijing has responded to recent U.S. imposition of 31% antidumping measures on Chinese solar panels by finding that U.S. subsidizes clean-energy projects in violation of international trade law under the WTO. These U.S. and Chinese trade actions only heat up U.S.-China trade relations to a higher extent.

What is the impact of these trade disputes on private Chinese investment into the U.S.?

Chinese corporate investment into the United States expands daily. Wang Jianin’s corporation, Dalian Wanda Group LTS., has announced a corporate takeover of AMC Entertainment, the second-largest movie chain in the United States. This investment of $2.6 billion is now the largest Chinese investment into the United States.

This is particularly interesting in context of falling FDI into China this year, increased emphasis in the U.S. in attracting FDI, efforts by U.S. firms to redirect some of its foreign investments back to the U.S., and recent uptick in both global mergers and greenfield investments.

But trade disputes concerning antidumping duties and countervailing duties cannot be allowed to derail increasing Chinese investment into the United States.

Trade remedies often hurt domestic industries in the U.S. that depend upon imports to incorporate into their finished products. Of course, they also hurt the entire import industry that sells and services foreign produced goods.

Trade and exports are good for the United States but direct investment is of critically importance also.

The federal government and states are promoting exports as a means of economic development. But foreign investment holds the key to even greater economic development and jobs in the U.S. Maintaining an open-investment environment is essential.

Fostering a domestic business and investment environment that is not hostile to global  investment is of a great importance.

Just ask the Europeans why the Chinese are not helping in their debt crisis. It’s obvious that increased EU trade remedy actions against Chinese imports is one important reason. (The glossy paper case and probably a new one concerning Huawei are the most recent examples.)

Unnecessary CFIUS proceedings, merger reviews, and overly aggressive trade remedy actions in the United States are not good for promoting cross-border business and investment by Chinese or other firms. (Cash-rich Japanese firms are returning to global M&A in numbers rivaling their  forays in the 1980s.)

So while states and industries are out seeking foreign investment the federal government needs to exercise greater prudence in filing or approving trade actions with domestic and international agencies. This includes restricting politically inspired WTO actions against China that have shown increased frequency and heightened focus under the Obama administration. Increasing focus and expansive definition of state-owned enterprises (SOE) as providing illegal subsidies pushes trade law to its limits.

Prudence in trade relations is good for foreign investment. It is good for American business, economic development, and jobs in the United States.