Last September's Xi-Obama summit promised to push towards a bilateral investment treaty. Over half a year later, little progress has been made. With cross-border investments growing, such a treaty is needed now more than ever.

A Sino-US bilateral investment treaty (BIT) has long been on the agenda in Beijing and Washington. After Chinese President Xi Jinping's state visit to the United States last September, both he and US President Barack Obama pledged to work towards an agreement. Nonetheless, progress appeared to stall until a former Chinese commerce minister declared last month that negotiations were in their final phases.

Clinching that deal would mark a major advance in Sino-American relations, helping to level the playing field for investors from both countries by protecting against unfair and arbitrary treatment.

For US lawmakers and industry giants, concerns about Chinese investment revolve around intellectual property infringements. In the American view, Beijing wants to obtain trade secrets through both illegal (industrial espionage) and legal activities (acquiring companies and strategic patents). It's no wonder a climate of distrust exists: In a recent survey, only 38 per cent of Americans held a favourable view of China, while only 44 per cent of the Chinese public saw the US in a positive light.

A second major concern (that stalled negotiations for the better part of eight years) was the Investor-State Dispute Settlement (ISDS) mechanism, which many US analysts view as a tool for foreign investors to attack American sovereignty. However, an ISDS works for investors in both countries - its core aim is to prevent unfair competition and governmental expropriation of foreign assets. Both parties would gain significantly by deferring dispute resolutions to a third party.

Other concerns loom as well. US media outlets have gloated about Beijing's flailing economy since the August 2015 market crash - perhaps a sign that the Chinese dragon is finally flaming out. Those same outlets are now stoking the perception that Chinese merger and acquisition (M&A) activities overseas are receding, shot down either by US regulators or sheer over-extension.

Reality couldn't be further from the truth. The year 2016 may see Chinese investment in the US reach unprecedented levels - all the more reason why a BIT is needed sooner rather than later. A BIT would force Chinese investors in the US to "play by the rules" or risk being sanctioned.

However, even a BIT is not the silver bullet some chalk it up to be.

Beijing believes the Council on Foreign Investment in the US (CFIUS) is singling out Chinese companies in order to impede US-bound Chinese investments.

CFIUS was created under then President Ronald Reagan to examine foreign investments that could threaten national security. The inter-departmental committee, chaired by the Treasury alongside members of other government agencies (including the intelligence community), receives notices of pending foreign investments and either approves or investigates further.

The problem is that "national security", especially where the US government is concerned, is an ever-expanding concept. As a result, investments are now investigated for reasons once overlooked. While past investments were scrutinised only if linked to defence industries, they are now held up for buying up too large a share in a specific industry or for gaining access to sensitive technology, particularly in critical sectors (like energy and agriculture).

The planned US$43 billion (S$59 billion) merger between agro-giants Syngenta and ChemChina is one of those being carefully scrutinised by CFIUS. While Syngenta is Swiss-owned, its biotech division is US-based and a leader in genetically modified seeds. ChemChina is essentially state-owned, enough to send alarm bells ringing throughout Capitol Hill. A group of congressmen led by Senator Chuck Grassley explicitly asked the Treasury to review the investment, saying they are "concerned about national security"; in particular, the effects of a Chinese company gaining access to US technology and potentially compromising food security. US Agriculture Secretary Tom Vilsack has also expressed concerns.

Such opposition can have a powerful effect on M&A deals. CFIUS might still scuttle the current Syngenta/ChemChina merger, especially since Syngenta's facilities are located near key US military bases.

In the first two months of this year alone, investigations undertaken by CFIUS resulted in three investments being abandoned by Chinese companies.

A fourth deal, a proposed acquisition of Starwood by insurer Anbang, fell through after the Chinese company walked away over potential issues with China's own regulators. The Insurance Regulatory Commission allegedly opposed the deal because Chinese rules state the outstanding value of overseas assets owned cannot exceed 15 per cent of a company's total assets.

A BIT would do little to resolve such deep-rooted issues. For example, CFIUS has routinely put up roadblocks before proposed M&As with British, Canadian or Japanese companies.

As long as China's state-owned enterprises (SOEs) are perceived as too closely aligned with the Chinese Communist Party, any acquisition would be interpreted as nationalisation.

For example, a 2014 anti-monopoly law appearing to target foreign companies in a bid to support Chinese SOEs did little to build trust. A BIT's true value comes from it helping Beijing be seen as a responsible and trustworthy economic partner - something China clearly views with great importance, considering its systematic lobbying to join key international institutions.

While a BIT would provide US companies with fair and equal access to Chinese markets, it would only be the beginning. Cross-border investment effectively creates an incentive to resolve conflicts on the basis of shared interests.

A BIT may not guarantee peaceful coexistence on its own, but it will at least be a step in the right direction for bilateral relations.

• The writer is a political risk analyst based out of Hanoi, Vietnam, and contributor to Global Risk Insights.