Country risk reference rating: level 3 (3/9)
Country Risk Outlook: Positive
◆Political Risk
Partisan disputes in the United States have eased, but they still pose certain constraints on government governance. The United States is socially stable and has good momentum for sustainable development, but terrorism continues to be a major factor that continues to trouble America’s domestic security. The spillover risks brought to the world by the adjustment of U.S. economic policies deserve attention. In terms of international relations, the United States will continue to maintain the original diplomatic framework and promote the “Asia-Pacific rebalancing” strategy. Continue to focus on multilateral coordination to resolve international and global issues. However, after the Ukraine crisis, the deterioration of relations between the United States and Russia will have an impact on the United States’ diplomatic strategy in Iran, Syria, and the world.
◆Business environment
Taxes in the United States are levied by federal, state, and local governments. The federal government imposes income, excise, estate and gift taxes. Most state and other local governments impose franchise, income and/or capital base taxes as well as sales, use, property, estate and gift taxes.
In order to encourage the development of the real economy, Obama in his second term sought to reduce corporate taxes, expand the tax base, simplify the tax system, close tax loopholes for individuals and companies, and establish minimum corporate tax standards for all companies to attract more companies. investment and development in the United States while increasing the fiscal revenue of the U.S. government.
In addition, the U.S. dollar is a freely convertible currency, and the United States has no restrictions on the remittance of profits, dividends, interest, royalties, and fees for non-citizens. In the new version of the Bilateral Trade Protection Agreement released in 2012, the United States requires that foreign investors be granted national treatment during the entire investment process, that is, in terms of establishment, acquisition, expansion, management, management, operation, sale or other investment disposal. Foreign investments and investors must be treated no less favorably than domestic investors and their investments in the host country, including in the pre- and post-establishment stages.
Judging from the four indicators of tax system, investment convenience, infrastructure and administrative efficiency, the United States has a superior environment for attracting foreign operations and investment. According to the latest “Global Business Environment Report 2014” released by the World Bank, the overall business environment of the United States ranks fourth among 189 countries (regions) in the world, the same as in 2013. The U.S. business environment risk outlook for 2014 is stable.
◆Economic Risk
Driven by the moderate growth of private consumption and the continued expansion of the manufacturing industry, the U.S. economy continues to maintain a comprehensive and moderate recovery, the employment situation continues to improve, and inflationary pressure is not high. Various risks such as its fiscal balance, external balance, and debt repayment pressure are all developing in a good direction, and its sovereign risk is small. Sino-US economic and trade also continues to be in a state of healthy development.
As the largest developing and developed countries in the world, China-US bilateral trade is highly complementary and has huge potential. In recent years, China-US economic and trade ties have become increasingly close, the scale of economic and trade cooperation has continued to expand, and the areas of cooperation have expanded. In 2013, the bilateral trade volume in goods between China and the United States hit a new high of US$505.5 billion. According to U.S. statistics, China remains the U.S.’s third largest export market and largest source of imports. In terms of investment, the cumulative two-way investment between China and the United States has reached nearly 100 billion US dollars. As of the end of June 2013, the United States’ cumulative investment in China reached US$71.8 billion, becoming one of China’s largest sources of foreign investment. At the same time, China’s non-financial direct investment in the United States has reached a cumulative US$11.2 billion. As household spending grows moderately, corporate fixed asset investment resumes growth, and the job market overall further improves, the internal stability of the U.S. economy is increasing in the future, and the economy is expected to maintain moderate growth from 2014 to 2015. Future neutral fiscal policies, tax increases and spending cuts will allow the U.S. fiscal situation to continue to improve. The Federal Reserve will continue to steadily implement its plan to reduce the scale of bond purchases and maintain its current low interest rate policy unchanged.
◆Policy suggestions
The United States will have an important impact on the future global political and economic landscape through multilateral trade negotiations. As the Federal Reserve reduces its bond purchase plan and eventually normalizes interest rates, it is crucial to control the timing of the launch of a series of policies to stimulate lending, investment, and consumption. The impact is complex and brings uncertainty to the U.S. economic recovery. In addition, changes in asset prices and capital flows caused by changes in U.S. monetary policy may create risks of financial instability in countries with weak economic foundations, and adverse changes in the external environment will also affect the U.S.’s own economic growth.
At present, Chinese companies investing in the United States still face strict national security review. However, the Sino-US bilateral investment protection agreement has entered the stage of substantive text negotiation. If the two sides can reach an agreement, it will provide a relatively stable, transparent and predictable investment environment for Chinese enterprises to invest in the United States.
