When the Asia Society’s Center on U.S.-China Relations and the Woodrow Wilson Center’s Kissinger Institute released our report in May 2011, An American Open Door: Maximizing the Benefits of Chinese Foreign Direct Investment, by economist Dan Rosen and Thilo Hanemann, we were surprised by three things. The first was that most Chinese had little idea that their country’s rates of investment had increased by well over 100% in the past year or so, albeit from a rather low baseline that put China on a par with countries such as Denmark and New Zealand.

The second, was that despite their impression, as Dan suggests in his post above, America still remained very open to Chinese investment. Third, many were quite stunned by our estimates that there was a potential for $1-2 trillion in investment to flow out of China over this current decade. (The point of our study was simply to alert Americans to a new reality: If the political atmosphere in the U.S. is not made more receptive to Chinese investors seeking to do M&As in sectors of the U.S. economy that have no national security consequences—from investors in China eagerly seeking both to globalize and move up the value chain—they could go some place else, and we would be the worse for it.

 Why would they do that?

 Our finding was that, while the U.S. remains one of the most open economies to foreign investment in the world—which has been to enormous benefit—all-too many Chinese do not see us that way. In other words, even though most investments run into very little official resistance, a number of prominent failures (some of which have had legitimate national security concerns) have created the undeniable impression that Chinese investment is not really welcome here.

Paradoxically, we also found that our actual regulatory regime—overseen by the inter-departmental Committee on Foreign investment in the U.S. (CIFIUS), which is run out of the Treasury Department and can only deny M&A investments that jeopardize national security (and has no say over “Greenfield” investments)—was actually quite fair, turning down only a very small percentage of Chinese investments, largely in the telecoms field. What we found to be creating the impression of non-receptivity, poisoning our investment climate and driving some Chinese investors away was, instead, an often fearful, even hostile, political atmosphere, often created by lobbyists and members of the U.S. Congress with protectionist interests, rather than the government’s regulatory process itself.

But it also must be said that the Chinese have also not played their political hand as well as they might either. Many state owned enterprises (SOEs) have very murky systems of management and governance that are lacking in transparency. Cyber hacking, intellectual property theft, and the increasingly truculent manner in which China now sometimes deports itself in the world also create an unfavorable climate in which “trust building” is hardly possible.

Nonetheless, if one believes that more FDI from China—and every other country, for that matter—is good generally good for the U.S., as Dan and I, do, then Americans need to become far more mindful of the consequences of the effect of unofficial political static, that can serve as a negative force field, especially when a high profile Chinese enterprise seeks to make a beachhead in our economy. In reflecting on this situation, here it is wise to remember that in the 1980s, we once had the same negatively reflexive reaction to the prospect of greater Japanese investment. (Remember the purchases of Pebble Beach and Rockefeller Center?) Now, Japanese companies provide almost three quarters of a million jobs here in the U.S.

Of course, China is not Japan. But, as our report demonstratively shows, there is an enormous wave of potential FDI building that wants to exit China. It will only grow over the coming decade, and despite the vagaries of our overall bilateral relationship with China, it is emphatically in our national interest not only to accept our share, but to actively cultivate it.