Both Democrats and Republicans long have heralded foreign investment in the United States as a net positive for the United States.

On July 14, 2004, then-President Bush told a Chicago audience, “I have no problem with foreign capital buying U.S. companies.”

A July 1, 2009, fact sheet from the Obama administration’s Bureau of Economic, Energy and Business Affairs stated “foreign investment … is vital to U.S. prosperity.”

But the dirty little detail of that issue is that 92 percent of Foreign Direct Investment (FDI) in 2007 was a result of mergers with and outright acquisitions of existing U.S.-owned firms.

The natural tendency when regarding foreign investment is to look at the jobs that supposedly are created. But does foreign investment really “create” jobs? Not according to a 2004 Department of Commerce report, which showed 95 percent of Foreign Direct Investment (FDI) was used for the “purpose of merely acquiring and exporting control.”

This means that an overwhelming majority of FDI is not used for new, upstart production as is often perceived. And when you take into account the layoffs that almost always accompany foreign acquisitions of existing U.S. companies, the effect of foreign investment on American jobs can easily become a negative.

For example, when the Belgian-Brazilian conglomerate InBev acquired the legendary St. Louis-based Anheuser-Busch in a $52 billion takeover, the new “foreign investment” resulted in 1,400 U.S. job cuts within just a few weeks.

In short, foreign companies aren’t investing in America as much as they are using America to invest in themselves. After they rent out our American labor, they take their profits back home and stuff them in foreign-owned banks, pay taxes on those profits to foreign treasuries, and reward foreign owners and investors.

Paul Craig Roberts, former assistant secretary of the Treasury in the Reagan administration, once said on Lou Dobbs’ program that when foreigners acquire our assets, they “acquire ownership of our real estate, of our companies, of the corporate and government bonds so we lose all the future income streams that are associated with the assets when we lose the ownership. So it is a bad thing.”

But what if we got even more specific, and instead of talking about foreign investment, we started dealing with the new investment type of the decade: Chinese investment? In other words, if China, awash in hundreds of billions of U.S. dollar cash reserves (money that used to be ours before we sent it to China to buy their cheaply made goods thinking free trade was the answer to our economic problems) started buying existing American-owned companies.

The floodgates already have opened for Chinese investment in America. Chinese-owned companies invested $1.73 billion in 2009 for U.S. projects or acquisitions, and $2.81 billion as of September 2010.

China’s state-owned Tianjin Pipe has plans to invest $1 billion in a steel pipe mill next year near Corpus Christi, Texas, to avoid a 63 percent U.S. tariff. Pacific Century Motors, hatched from Beijing’s municipal government, acquired Michigan-based Nexteer Automotive from General Motors, and it now makes driveline and steering systems.

Despite the kudos deserved to certain legislators for pushing and including “Buy American” laws for the economic stimulus package, Chinese-owned Suntech Power Holdings qualified for and received $2.1 million in manufacturing tax credits and became eligible to supply solar panels from their 117,000-square-foot Arizona plant for U.S. government contracts with “Buy American” clauses.

This highlights the need to define “Buy American” as more that just buying American-made products. The true definition of “Buy American” should be this: Buying American-made products from American-owned companies.

U.S. ambassador to China – and possible Republican hopeful for president – Jon Huntsman recently told Business Week that China is expanding because “they have the money to expand” (remember all that money we sent to China for those cheap Chinese-made toys and clothes, etc.) and their core interest is “Preserving the Communist Party.”

The double digit economic growth China has experienced year after year goes a long way to preserve communism.

Of course Chinese-based Suntech Power Holdings wasn’t required to partner with an American company to set up shop in Arizona. But U.S.-owned First Solar of Tempe, Ariz., had to team up with a state-owned subsidiary of China Guangdong Nuclear Power Co. to get approval to build what might be the world’s biggest solar-energy plant in the Inner Mongolia region of China.

Luckily the Export-Import Bank is trying to level the playing field a bit, by setting terms to get the Pakistan government to buy 150 locomotives from General Electric. Did you know GE is moving the production of its new energy-efficient water heater from China back to America, creating 400 U.S. jobs? Did you know Ford Motor Co. detailed plans last August to move nearly 2,000 jobs from India, Mexico, and Japan and back to America by 2012?

Still, more has to be done to level the playing field for American companies. Just last week, Evergreen Solar decided to form a joint venture with a Chinese company, lay off 800 American workers at its main plant in Massachusetts, and move to China, citing “higher government support available in China.” I guess the $43 million they got from Massachusetts in 2008 wasn’t enough to keep them from entering discussions with China in 2009 to move the plant overseas.

The danger of what can happen when an American company falls into Chinese hands is detailed very well within the intentions of Chinese-owned Volvo (Ford sold Volvo to China-based Zhejiang Geely Holding Group last year). According to a Jan. 13, 2011, Wall Street Journal article, Volvo is considering becoming the first major automaker to export China-built cars to the U.S.

That’s not a surprising scenario to be dreamed up by a Chinese-owned company, is it? It’s becoming clearer than ever that America needs less foreign investment and more American investment.

Reducing job-killing foreign investment in the United States isn’t going to get any easier as more American companies fall into foreign hands and Chinese companies get to call the shots on what’s best for their home companies. The best way we can do our part as consumers is to educate ourselves on which companies are American owned and which ones are foreign owned and then support our American-owned companies. That will keep more jobs, profits, and much-needed tax revenue within our borders.

Friedrich List, a German economist who also lived in America for several years and wrote “The National System of Political Economy” in 1841 before he died in 1846, once said, “The power of producing wealth is infinitely more important than the wealth itself.”

I would add that by keeping the ownership of our companies in American hands, America retains the power to create wealth.

Note: Read our discussion guidelines before commenting.