Economy
Direct investment from China benefiting America
(Xinhua)
Updated: 2011-05-13 15:01
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WASHINGTON -- Foreign direct investment from Chinese firms in the United States can create win-win situation, according to an article published by the Wall Street Journal on Thursday.
"China's gain could also be America's gain," said Daniel Rosen and Thilo Hanemann, co-authors of the article entitled "America Gains From Chinese Investment."
They said that the US should take the opportunity of China's rapidly growing direct investment abroad.
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"Americans could be a major beneficiary of this -- if anti- China sentiment in Washington and around the country does not bring down the curtain just as the show is starting," they noted in the article.
China started investing overseas in a big way in the mid-2000s, almost entirely in the natural-resources sector. Chinese firms made some attempts to invest in the US -- notably CNOOC's failed bid for oil company Unocal in 2005 -- but through 2008, such forays were few and far between.
Since 2009 that story has begun to change. In a new study, the two authors find that over the past two years direct investment expenses by Chinese firms in America have grown more than 130 percent a year.
In 2010 alone, Chinese firms spent more than 5 billion dollars in America on a combination of 25 "greenfield" projects built from scratch and 34 acquisitions of existing companies. While China still accounts for only a tiny share of total foreign direct investment in the US, Chinese firms are today invested in at least 35 of 50 states and an upward trend is clearly underway.
The article cited Japan's investment story in the US as an example, saying that China's investment in the United States will benefit both countries.
"Japanese firms had a difficult start in the US in the 1980s, as they were greeted with skepticism and fear. Today, Japanese firms employ almost 700,000 Americans with an annual payroll of nearly $50 billion," it said.
The article warns that it is a "clear danger" that anti-China reactions will only grow louder as the numbers increase, and even result in more restrictive terms for firms from China.
It suggests that the US need to open its door to Chinese firms. Otherwise, "it would also be tragic for American communities to lose the jobs, innovation and tax revenue additional investment dollars could create."
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