Last week, China and the United States agreed to enter negotiations on a bilateral investment agreement BIT. China’s readiness to negotiate an agreement that encompass all industries and all stages of investment comes on the back of fast-growing Chinese outbound investment. In the United States, Chinese FDI has soared from virtually zero to $6.7 billion last year. In the first six months of 2013, Chinese firms spent almost $5 billion on M&A and greenfield projects in the US, with another $10 billion worth of deals announced or pending. This note discusses the most important economic and political developments in the US-China investment relationship in Q2 2013.