Wake Up America, the Chinese (Investors) Are Coming!

But there’s no reason to be afraid

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China Daily / Reuters

A truck loaded with containers is seen at a port in Lianyungang, Jiangsu province, China, Jan. 10, 2014

A quarter century ago, Americans were rattled by a surge of money coming from an Asian upstart, Japan. It seemed that Japanese firms were everywhere, buying everything, from cherished landmarks like Rockefeller Center to prized corporate assets such as Columbia Pictures. Was anything safe or sacred before an avalanche of Japanese cash?

Today, the U.S. is potentially facing yet another onslaught from Asia, this time from another economic rival, China. Just like Japan in the 1980s, China today is translating its expanding wealth into global economic clout. China last year overtook the U.S. as the world’s biggest trading nation. And increasingly, like the Japanese, Chinese firms are morphing themselves form manufacturers and exporters into major global investors. According to data from the American Enterprise Institute and Heritage Foundation, Chinese outward investment reached $85 billion in 2013, a dramatic increase from a mere $10 billion in 2005. The U.S. has been the No.1 destination, luring more than $14 billion of investment last year alone.

(MORE: Why Trying to Hurt China in the Trade Game Could Backfire)

That trend is likely to continue. The Chinese government is becoming more and more supportive of Chinese overseas investment. One goal of a renewed effort to reform the economy, launched by newly installed President Xi Jinping last year, is to liberalize financial flows and encourage Chinese companies to invest more outside of China. Deals done by Chinese firms are steadily rising in profile and size. Last year, China’s Shuanghui agreed to purchase American pork giant Smithfield Foods for $4.7 billion, the biggest Chinese acquisition of a U.S. company yet. Right now, Chinese automaker Dongfeng is currently looking to grab a significant stake in struggling French carmaker Peugeot.

Not all Chinese money has been so welcome, however. Much like Japanese investment decades ago, Chinese incursions are sparking jitters. Concerns about cybersecurity in Washington have stymied attempts by mysterious Chinese telecom equipment maker Huawei to buy U.S. assets. Another worry is that investment from highly subsidized Chinese state-owned enterprises will expand the influence of China’s government or skew market competition. According to the AEI-Heritage data, SOEs account for 68% of all investment in the U.S. (Outside of the US, their share is much larger, at roughly 94%.) Even the innocuous-sounding Smithfield deal faced criticism in Congress, with lawmakers questioning if Chinese ownership could damage American economic interests or taint the food supply.

Perhaps certain Chinese deals should be examined with a discerning eye, especially on national security grounds. But overall, greater Chinese investment could boost growth and jobs in the U.S. and around the world. Once-feared Japanese investment has become a major source of employment in the U.S. According to the Japan Automobile Manufacturers Association, Japan’s carmakers and their dealer networks employ more than 400,000 people in the U.S. That’s why investment from Japan no longer upsets anyone in America. Japan’s Suntory announced on Monday it will buy U.S. bourbon distiller Beam in a $16 billion deal. Soon Chinese investors will probably seem every bit as ordinary.

MORE: When Exactly Will China Rule the Economic World?

7 comments
KachinaLively
KachinaLively

I always wondered if Americans would rise against tyranny? We really never had to worry about our government, bad little boys and girls, until, now. We are being made in their image against the wishes and will of the American people.

RobertNguyen
RobertNguyen

Meanwhile the republicans in Congress still worry about Obamacare and has voted 47 times to repeal the law of the land...

Onepatriot
Onepatriot

Sorry, but all this investment in our businesses here in the USA makes me very nervous.  We all know what kind of influence the Chamber of Commerce exerts over Congress through all their lobbyists.  We can't even get new gun controls because they're afraid of the NRA.  It's not out of the realm of possibility for another country to use that strategy to gain enough influence through our politicians in Washington in ways that could severely weaken us.  If stealing defense secrets is so important that we have attempts every day on that front, then why should we allow this kind of back door infiltration?  

 The younger generation many not be interested in looking back, but we have a lot of history dealing with their ambitions for expanding their power in very aggressive ways.  I hope there are enough wise people in Washington to be watching this very closely.

BorisIII
BorisIII

Seems good that China will depend on are economy doing well.  I guess all countries are gradually depending on all other countries economies.

meddevguy
meddevguy

Get used to the Chinese investment -- be thankful they still think we are still a good place to buy and control. We helped invent the current China when we decided that manufacturing and technology was less important than rules and selling stuff. China decided the opposite, created a society that honors those who turn ideas into things they can sell back to us for ... dollars that they now can invest.


The US voters seem to listen to the call that dividing up our country's assets INSTEAD of creating more by investing in the private sector is somehow more noble -- and it does get votes. It is strange that the Chinese government that has a recent tradition of harsh central government seems more friendly to at least pseudo-private business, while a US government with a (until very recently) capitalistic background, is moving rapidly toward a central planned and owned economy.


The Chinese are operating the American playbook from the late 19'th and all of the 20'th century rapid economic growth, including the technology-growing space race. We forgot -- and will let the economic victors own the country.


I wonder if we'll end up like France -- an amazingly pretty place with a great past. Actually, even they are waking up their technology. Not every well so far, but they stole $9.5 Billion of JAL aircraft orders from Boeing, partially because our government interfered with that company's planned plant in South Carolina, signalling that our present government would punish rather than help our premier companies.

tube6l6
tube6l6

@meddevguy As long as China isn't allowed to buy America's tech jewels.. investment in other areas should be encouraged, because a China with its eggs in foreign baskets is less likely to start a war with US allies in asia.