The concern over the rapidly approaching "fiscal cliff" may slow China's direct investment in the United States next year, analysts warned at the third annual Columbia China Prospects Conference in New York City on November 10-11.

Lou Jiwei, chairman of the China Investment Corporation, told Xinhua News Agency on Saturday in Beijing that China's sovereign wealth fund plans to invest more in neighboring countries, due to worries about the euro zone's sovereign debt crisis and the fiscal cliff in the United States.

"Fiscal cliff" is the colloquialism used to describe the conundrum that the U.S. government will face at the end of 2012, when a series of federal tax increases and spending limitations are scheduled to automatically take effect, which means $7 trillion worth of tax increases and spending cuts over the next decade. In addition, the debt ceiling will need to be raised by early next year.

Less than one week after President Barack Obama's re-election, a potentially bitter fight over the budget looms between Obama and the Republican congressional leaders.

Both major parties continued to sharply disagree over the key issue of whether top tax rates should be raised or federal spending should be cut, though both promised to find compromise to help resolve the looming crisis. Republicans said higher rates would damage the economy, while Democrats said it was the only equitable way to tackle the debt.

According to the U.S. Congressional Budget Office, the U.S. economy will likely enter another recession if lawmakers cannot reach an alternate deal.

Kathy Bostjancic, director of Macroeconomic Analysis for the Conference Board, said there is a concern that the U.S. would get its credit rating downgraded by Standard & Poor (S&P).

"It seems to me the odds of us getting downgraded again are very high, because I don't see either side, Republicans or Democrats, in favor of the sequestration of spending," she told foreign reporters during a briefing held by the State Department on Election Day, adding that "investors may be impacted."

Huge post-election sell-offs continued last week in the U.S. stock market, while gold futures on the COMEX (Commodity Exchange, Inc.) division of the New York Mercantile Exchange rose last Friday.

Asian shares and oil prices were capped on November 12 as investor sentiment was weighed down by U.S. fiscal concerns, according to Reuters.

(Reporting from New York City)