China's investments boost US economic recovery

(People's Daily)

08:28, September 15, 2011

Edited and Translated by People's Daily Online

China has taken an important position among the countries with investments in the United States and its cumulative investments in the country reached 6 billion U.S. dollars as of the end of 2010, an official from the U.S. Department of Commerce recently said. China's direct investments in the United States have increased by 53 percent over the past five years, topping that of other countries. 

The rapidly growing amount of Chinese investments in the United States have not only helped the United States ease the impact of the U.S. debt crisis, create more job opportunities and emerged from the economic downturn, but also enabled Chinese enterprises to expand the U.S. market. 

U.S. market welcomes China's investments 

Chinese enterprises already paid nearly 12 billion U.S. dollars in overseas taxes and created 780,000 job opportunities as of the end of 2010. China’s rapidly growing outbound investments have brought about enormous benefits to other countries and itself. 

Barry Johnson, executive director of the U.S. Department of Commerce's "Select American" investment promotion program, said that for the U.S. government, the greatest contribution of foreign direct investments is the job opportunities they create. China's direct investments in the United States have created 10,000 job opportunities as of the end of 2009. He added that the United States welcomes China's investments and will encourage, promote and assist Chinese enterprises in the most open-minded manner in making direct investments in the country. 

He Maochun, director of the Research Center of Economy and Diplomacy under Tsinghua University, said that China has the overseas investment capabilities and its increasing outbound investment demand simply matches the demand of the United States for the current economic recovery and long-term overseas cooperation. Both U.S. investments in China and China's investments in the United States are developing smoothly. 

Chinese investments can help pull the United States out of crisis 

The U.S. economy has remained sluggish due to the deteriorating debt crisis and the downgrade of the country’s credit rating. The lack of domestic investment has made it urgent for the United States to attract foreign capital. 

Li Laya, a professor of econometrics at Huaqiao University, recently wrote that there are two reasons for the lack of investment in the United States. First, U.S. investors are unwilling to invest domestically due to the lack of new and mature technologies and markets. Second, U.S. investors like to invest in emerging markets, which provide higher rates of return than domestic markets. By contrast, China and other emerging market countries are using their trade surplus to invest heavily in the United States, which can not only foster a balanced global economy but also boost the U.S. economic recovery.

"Chinese investments are of major practical significance to the United States," said Wang Jun, deputy director of the Department of Research and Consulting under the China Center for International Economic Exchanges. Wang believes that China can help the United States upgrade aging rail facilities and increase employment by investing in its high-speed railway sector. 

Chinese investments can also help relieve the debt burden of the United States. In order to ease its structural problems, the United States needs continued fiscal stimulus, which mainly comes from tax cuts and infrastructure investments. Chinese companies are offering much-needed help to the United States by investing in the country. 

The access threshold for Chinese enterprises should be lowered.

The U.S. economic downturn remains, thus it is particularly urgent to attract foreign investment. Trade and investment protectionism have emerged again however. The U.S. Department of Commerce made a preliminary decision on Sept. 2 to levy high anti-subsidy tariffs on certain Chinese steel wheels and galvanized steel wires. 

He said that these measures were mainly driven by the U.S. government's domestic policy needs. He said that the United States should give Chinese enterprises substantial and unconditional market and economic treatment as soon as possible and eliminate market access discrimination against and competition barriers faced by Chinese enterprises. Meanwhile, he believes that the United States should provide Chinese enterprises with as much investment consultation and explanation of information technology, language, literature and laws as possible in order to help them adapt to the U.S. laws.

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