Wall Street Journal

Foreign Direct Investment In U.S. Remains Strong

By Greg Hitt

WASHINGTON -- New direct investment in the U.S. by foreigners remained strong through 2005, amid fierce debate in Congress over the perceived dangers posed by investment from abroad.

For the year, new foreign direct investments in the U.S. totaled $86.82 billion, essentially unchanged from 2004's $86.21 billion, the Commerce Department reported. Investors in the United Kingdom remained the largest source of foreign investment, accounting for $30.31 billion of the total, up from $23.28 billion. Japanese investors boosted direct investment in the U.S. for the first time since 2000, to $3.56 billion from $1.02 billion in 2004.

Foreign direct investment includes investments in hard assets, like factories and bridges, but not stocks and bonds. The Commerce Department report covers spending by foreigners to acquire existing businesses or establish new ones and doesn't reflect capital flows between existing affiliates of foreign companies, which are reflected in broader reports such as the Commerce Department's current-account statement.

The strong flow of capital from abroad belied growing tensions in the U.S. Last year, U.S. lawmakers objected to plans by Cnooc Ltd., a Chinese government-owned company, to buy Unocal Corp., an American oil-and-gas company.Those same concerns fueled opposition this year to now-scuttled plans by Dubai Ports World, a company owned by the government of Dubai, to take control of commercial operations at several U.S. ports.

Dubai is part of the United Arab Emirates, a U.S. ally in the war on terror. In 2005, direct investments in the U.S. from the UAE totaled $1.93 billion, up from $519 million in 2004, the Commerce Department said. Direct investments from China totaled $73 million, down from $93 million a year earlier.