Oxstones Investment Club™By Zhang Yuwei (China Daily),
NEW YORK – At a time when the United States is going through a slow economic recovery and continue to have high unemployment, some US lawmakers are trying to blame China for its job losses.
However, recent statistics show that Chinese businesses have stepped up efforts in investing overseas, including in the US. And many experts believe that the increasing investments in the US and the growing trade relationship between China and the US directly results in job creation.
David Loevinger, senior coordinator and executive secretary for China Affairs at the US Department of Treasury, is optimistic there will be “a wave of investments” coming out of China to the US.
“Chinese companies increasingly come to invest in the US. If you look at the data just in 2010, Chinese investments in the US more than doubled. Everything in China starts up from a little base, and everything grows rapidly,” said Loevinger during the recent Global China Summit organized by the Washington Post Live. China Daily was an official media partner of the summit.
Acknowledging that China’s investment is “less than 2 percent” of the total foreign direct investment (FDI) received by the US, David Rubenstein, co-founder and managing director of the Carlyle Group, believes the current US policy has made it harder for Chinese investment.
“We made it difficult for them to invest here so they find it easier to invest elsewhere,” he said.
Rubenstein said the American business community has to recognize that it has an obligation to inform the government about ways to facilitate Chinese investment in the US.
“We have to work with Chinese companies and make sure they understand that they are more welcomed here than they might think.”
In the 2010 figures on FDI released recently by the US Bureau of Economic Analysis, or BEA, there was a big spike as China’s FDI in the US grew from $1.2 billion in 2008 to $5.9 billion in 2010, an increase of almost 400 percent within two years.
The BEA data also showed that in 2009 Chinese companies owned assets worth about $19 billion in the US, employed more than 4,000 people and contributed to $120 million to US exports in 2009 alone.
Chinese auto parts maker and solar panel producer Wanxiang Group, for example, is currently hiring more than 4,500 local workers in the US, according to Wanxiang America’s president Ni Pin. He added the company constantly looks for merger and acquisition deals, as they help create at least a couple hundred local jobs every year.
Chinese investment in the US has started to be tangible and it has been noticed at the local level. Just two weeks ago, Illinois Governor Pat Quinn was in China for an eight-day trade mission to strengthen exports to China and encourage Chinese investment in his state.
Currently about 30 Chinese companies have already invested in Illinois, including Wanxiang and Shenhua International, China’s largest coal producer.
China is US’ third-largest trading partner after Canada and Mexico. Last year, Illinois’ exports to China totaled over $50 billion, with the top products exported ranging from machinery, electronics and appliances to chemicals, transportation equipment and agricultural products. Illinois has seen a nearly 30 percent increase in exports to China in recent years, with last year alone totaling $3.18 billion.
China is the largest market for Illinois’ soybeans. Decatur-based agricultural giant, Archer Daniels Midland, will sell a Chinese soybean products manufacturer about 180,000 metric tons of soybeans by next December.
Deals Quinn signed while on the trade mission in China included one with Xinjiang-based Goldwind, a Chinese wind tribune manufacturer, which is set to build a $200 million wind farm and to create more than 100 jobs (including a dozen permanent ones) in Lee County.
This has not been largely recognized in Washington. As Rubenstein pointed out at the summit, “if anything, on Capitol Hill you see more people saying things that are probably anti-China investing here more than pro-China investing here”.
Cheng Li, a senior fellow at the Brookings Institution, echoed that point at the summit.
“Chinese companies are really frustrated about the difficulties in accessing the US market. From a Chinese perspective, we lend you (the US) money, we also want to help create jobs through investment, and also like to help infrastructure. Like (President Barack) Obama said, (the US) should learn from China in this area. So China should be a solution to the US’ problem and shouldn’t be considered as a problem.”
“America should continue to restructure its economy to produce more of what China wants. Already we see China buying more corn, soybean and pork from America than ever before. Attacking China’s currency policy is not smart – increased tension and a potential trade war between the world’s two economic superpowers does not help anyone. It does not create jobs but simply serves to destroy confidence,” said Shaun Rein, author of an upcoming book The End of Cheap China, who also runs a market research firm, China Market Research Group in Shanghai.
The Washington-based Economic Policy Institute published a paper recently, blaming widespread US job losses on trade with China. The paper said the growing US trade deficit with China, exacerbated by China’s currency manipulation, cost the US 2.8 million jobs, including 1.9 million manufacturing jobs, between 2001 and 2010.
However, Erin Ennis, vice-president of the US-China Business Council, which represents more than 200 US companies doing business with China, said the report is based on “the faulty assumption that every product imported from China would have been made in the US otherwise”.
“Much of what we import from China replaces imports from other countries, not products we make in the US today,” Ennis said.
China Daily
Tags: agriculture, China, china fdi in usa, USA