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US economy to benefit from record Chinese investment

Updated: Apr 13,2016 10:02 AM     Xinhua

WASHINGTON — Chinese direct investment in the United States is set to hit a new record this year, further boost US exports and create more jobs for Americans, according to a report released on April 12.

Chinese investment in acquisitions, new operations, and expansions in the US could reach $30 billion this year, following a record high of over 15 billion dollars last year, according to the report published by the National Committee on US-China Relations and the Rhodium Group, which tracks Chinese direct investment in the United States.

“Today’s Chinese investment in the United States gives us a fresh opportunity to learn about one another, and it is already having profound effects on the lives of Americans,” Stephen A. Orlins, President of the National Committee on US-China Relations, wrote in the report.

“While much of this year’s political campaign rhetoric has focused on jobs leaving the United States, Chinese investment is supporting more and more jobs on this side of the Pacific,” Orlins added.

By the end of 2015, over 1,900 Chinese affiliated companies operated in the US across more than 80 percent of its congressional districts and employed about 90,000 Americans, according to the report.

Growing Chinese investment also creates and strengthens connections between US communities and the Chinese market, the report said, noting that “major new investments in energy and entertainment in 2015 show Chinese investment facilitating the export of American goods and services to China.”

But the report warned that a rising politicization in the US presidential election cycle poses risk to incoming Chinese investment.

“The first months of the year have produced numerous instances of politicians from both parties chasing votes and media attention by issuing dire but ill-founded warnings about Chinese investments, and introducing bills that propose severely clamping down on traditional US openness to FDI (foreign direct investment),” the report said.

The report’s authors urged US Congress to ensure that “the debate about appropriate responses to Chinese FDI proceeds rationally and does not damage America’s reputation for openness.”

“It is essential that the debate in the US is objective, grounded in fact, and awake to both the potential risks and potential benefits from Chinese investment,” the report noted.

“We have got to understand that Chinese investment into America is going to be an increasing reality,” said Geoffrey Garrett, dean at the Wharton School of the University of Pennsylvania.

“As China moves further up the value chain, and particularly as the RMB (renminbi) is no longer undervalued, Chinese investment into the US will be an important part of this new normal reality,” Garrett told Xinhua.

Citing Japan’s experience of investing in the US in 1980s, Garrett said Chinese firms should also learn to be patient. “If we go back 25 years, the initial American reception to Japanese investment in the US was also not very positive,” he said.

China and the United States have agreed to push forward the negotiations on a bilateral investment treaty between the world’s two largest economies, which will help address a number of investment concerns between the two countries and expand two-way investment.

“The progress and further potential for growth of two-way US-China direct investment flows is one of the most notable bright spots in the bilateral relationship,” the report said.