The Unites States will attract up to $400 billion new direct investment from China by 2020 and that the State of California in particular will benefit, according to a new report published Thursday by the Asia Society predicts.

Before 2008, annual Chinese direct investment in the United States typically stood well below $1 billion. Since then, Chinese investment in the U.S. has exploded, reaching nearly $2 billion in 2009 and a record $5.8 billion in 2010.

In the first three quarters of 2012, Chinese firms completed transactions worth $6.3 billion, setting the stage for a new record year for Chinese investment in the United States.

California is the top target for Chinese investment in the U.S - it has attracted more investment projects from China than any other U.S. state.

Chinese investment in California is growing at triple-digit levels and could reach $60 billion by 2020 – if the state and private sector, in partnership with the U.S. government, do a better job working together to attract Chinese capital, according to Daniel H. Rosen and Thilo Hanemann of the Rhodium Group, authors of Chinese Direct Investment in California.

The report’s global launch took place at a joint AmCham Shanghai and Asia Society conference on the growing trend of Chinese investment in the U.S.

Compared to the rest of the U.S., Chinese investment in California is disproportionately from private rather than state-owned enterprises, greenfield rather than M&As, and is strongest in high-tech and the service sector—areas that the Chinese government and private sector have targeted for accelerated growth.

“California has been the leading edge of America’s Asian economic engagement for nearly 200 years, so it is not surprising that the state is one step ahead when it comes to hosting direct investments from China,” said Rosen.

“What is more surprising is just how much further the Golden State can benefit from China’s new commercial outflows if it gets serious about courting them,” he added.

“California’s private sector has been a strong leader in bringing Chinese investment to the state,” said Jack Wadsworth, Co-Chairman of Asia Society Northern California. “We need state government to make the same commitment, and efforts from ChinaSF and GO-Biz are steps in the right direction.”

Commenting on the importance of Chinese investment to the larger U.S. economy, Brenda Foster,
President of AmCham Shanghai said, “The U.S. is one of the world’s most open markets for investment and China is an increasingly important source of FDI. Initiatives like today’s conference are critical to communicating a welcoming environment to potential Chinese investors and to educating U.S. states, such as California, on what can be done to attract more investment from China.”