Avoid Investing in the U.S.-China Board of Investments

In mid-May, United States (U.S.) President Donald Trump journeyed to Beijing to meet with People’s Republic of China (PRC/China) President Xi Jinping.  In the summit run-up, U.S. Treasury Secretary Scott Bessent revealed the two sides were discussing a Board of Investment (BoI) that would “‘decide upfront what are the nonstrategic, nonsensitive areas where it would be possible for the Chinese to invest.’”  He added, “‘There are plenty of things that the Chinese could invest in in the U.S.’”[1]  On May 17, the White House confirmed the BOI’s establishment, labeling it a “cornerstone” of deals struck and a pathway to “optimizing the economic relationship.’” It described the BoI as a “government-to-government forum for discussing investment-related issues.”[2]  U.S. Trade Representative Jamieson Greer boasted that there had never been anything like the BoI because it was not ad hoc and said it would attempt to “‘put out issues when they arise.’”[3]  As presented by the PRC’s New York consul general, China envisions the BoI functioning as a “‘platform for both sides to exchange policies, expand cooperation, manage differences, and conduct pragmatic discussions on mutual concerns’” and a way to move crisis response to “‘institutionalized management.’”[4]  Should businesses invest time and money in hopes they will profit from the BoI?

Analysts positive about the BoI laud it for various reasons.  One think tank researcher touts it as a “stabilization mechanism” that might allow the future “‘outsourcing’ of future trade or investment disagreements…avoiding hard or politically sensitive decisions.’”[5]  Another opines it “creates a repeatable bargaining table,” providing a channel that can “reduce miscalculation…and creates a place for both governments to register complaints before they escalate.”[6]  Yet another, drawing upon the general history of U.S.-China dialogues, implies they can resolve defuse tensions, resolve misunderstandings and knowledge gaps, and limit surprises.  Furthermore, they can foster positive agendas, overcome bureaucratic silos, and build working relationships.  Beyond this, they can address company specific issues or alleviate pressures on companies.[7]

Lest there be too much excitement, it needs to be recognized from the get-go that it is unclear how institutionalized the BoI “institution” eventually will be with the summit yielding no information about its structure, frequency, or procedures.[8]  Significantly, even BoI “fans” admit that there are many matters to define/conceptualize and that China may not accept Washington’s conceptualization.[9]  What an understatement!  It is extremely difficult to determine a priori what is nonstrategic and/or nonsensitive foreign direct investment (FDI).  This is because determinations tie to a large number of factors including the state of relations between the U.S. and the PRC, what tech is desired (e.g., CPU chips lacked cache for AI training, but have regained it in the agentic AI world that has become the focus of much AI activity), the multifaceted nature of FDI (e.g., ports investments may entail not just cruise terminals, but the installation of the other side’s hardware and software, which, in turn, raise cybersecurity and surveillance issues), the availability of substitutes (e.g., which can serve to make a given technology less sensitive and/or strategic, and the location of investments (e.g., near a military base).  In addition, they depend upon bureaucratic, domestic, and center-subnational politics, implying even less clarity about what is nonstrategic and/or nonsensitive.  In short, the BOI’s ambit is nowhere near obvious.

Given the kinds of information needed to assess if a Chinese investment truly is nonstrategic and/or nonsensitive, it is hard to see how the BoI can operate separately from the Committee on Foreign Investment in the United States (CFIUS) process.  And if CFIUS is needed then this raises questions about the rationale for a separate BoI.  Washington implicitly is marketing the BoI as a mechanism for opening the door to Chinese FDI.  However, the greater the BoI’s degree of non-institutionalization, the greater the risk its ambit eventually will expand to cover much more than “security” barriers to Chinese FDI.  Future items on its agenda might include labor and environmental regulations, state or city level barriers, and operational issues.  It is easy to imagine, too, that American companies and their industrial associations will push for the BoI to address the challenges they are facing in China.  Turf expansion will make the BoI even more unwieldy and likely ineffective.  As for the value of dialogues, their champions frequently give inadequate attention to their limits and failures, the role that background conditions (e.g., China’s domestic economic conditions and needs or the geostrategic environment) have played in their successes, and the importance of proper structures.

President Trump is infatuated with FDI or, more precisely, attracting FDI to America.  His hope likely is that the BoI would lure Chinese FDI, bringing, in turn, jobs, manufacturing, reduced American dependence on China, joint ventures (JVs) and partnerships, and perhaps, even (gasp), technology transfer.  In light of its defects (dialogue proponents themselves note well-designed dialogues are critical), though, one should be skeptical how much the BoI will attract Chinese FDI even if investment conditions in the US are right, which cannot be assumed.  Moreover, while Chinese FDI can create jobs, boost economic development and tax revenues, and increase manufacturing, it also has downsides.  For instance, it may intensify competition, particularly unfair competition.  As well, there is limited reason for optimism that Chinese firms will enter JVs, strike partnerships, and share tech (presuming Beijing would let them, which is uncertain).[10]  In the final analysis, businesses would be wise, until the situation is much clearer, not to invest much in the BoI.

Image created with Google Gemini Nano Banana 2.0. Copyright 2026 All rights reserved. Jean-Marc F. Blanchard

[1] Gregory Svirnovskiy, “Bessent discusses investment board, expanding US-China trade with Trump in Beijing,” Politico.com, May 14, 2026, https://www.politico.com/news/2026/05/14/bessent-trade-china-beijing-00921177.

[2] Jacqueline Kotkiewicz, “Fact Sheet: President Donald J. Trump Secures Historical Deals with China, Delivering for American Workers, Farmers, and Industry,” May 17, 2026, https://www.whitehouse.gov/fact-sheets/2026/05/fact-sheet-president-donald-j-trump-secures-historic-deals-with-china-delivering-for-american-workers-farmers-and-industry.

[3] “Transcript: U.S. Trade Representative Jamieson Greer on ‘Face the Nation with Margaret Brennan,’” CBSNews.com, May 17, 2026, https://www.cbsnews.com/news/jamieson-greer-us-trade-representative-face-the-nation-transcript-05-17-2026.  See Demetri Sevastopulo and William Langley, “White House Says Donald Trump and Xi Jinping Agreed on ‘Board of Trade’ at Summit,’” Financial Times, May 17, 2026.

[4] Russell Flannery, “China sees opening for investment in U.S. after Trump-Xi summit,” Forbes, May 30, 2026, https://www.forbes.com/sites/russellflannery/2026/05/30/china-sees-opening-for-investment-in-us-after-trump-xi-summit.

[5] Andrew Capistrano, “Between the WTO and Decoupling,” Institute of Geoeconomics, May 22, 2026, https://instituteofgeoeconomics.org/en/research/2026052201.

[6] Zongyuan Zoe Liu, “China and the U.S. Agreed to ‘Strategic Stability’ in Beijing,” CFR, May 18, 2026, https://www.cfr.org/articles/china-and-the-u-s-agreed-to-strategic-stability-in-beijing-they-dont-define-it-the-same-way.

[7] Brendan Kelly, “Implementing effect U.S.-China economic engagement channels,” Asia Society Policy Institute, May 13, 2026, https://asiasociety.org/policy-institute/implementing-effective-us-china-economic-engagement-channels.

[8] Flannery, “China sees opening for investment in U.S. after Trump-Xi summit.”

[9] See, e.g., Liu, “China and the U.S. Agreed to ‘Strategic Stability’ in Beijing;” and Capistrano, “Between the WTO and Decoupling.”

[10] While Southeast Asia is not the U.S., a recent study of multiple cases of Chinese FDI in SEA raises doubts about potential positive spillovers.  See, e.g., Jean-Marc F. Blanchard, ed., The Effect of Chinese FDI in Southeast Asia (London: Routledge, 2026).