Restricting extraneous investment, the US is pushing its own employment opportunities out
By Wang Huiyao |
Updated: 2018-08-15 10:54
China’s positive enthusiasm for embracing extraneous investment in the past 40 years of reform and opening up, contrasts with the United States praising the banner of “US priority” and ideology to restrict extraneous investment, and it has also rejected employment opportunities offered from abroad. This is not only unfavorable to the investor country, but also detrimental to positive development of the US.
Recently, the "Select USA" 2018 Investment Summit was held in Washington. Most of the participating agencies believe that the administration of US President Donald Trump’s series of unilateral trade protectionist policy measures have caused widespread concern among global investors.
According to Reuters on June 28, the US Treasury Department suggested to Trump to use the Committee of Foreign Investment of the US (CFIUS) to control investment transactions, and new legislation by the US Congress will strengthen the power of the committee. Trump believes that it will strengthen the national security review process for preventing China from acquiring US sensitive technology, which is more "moderate" than targeting Chinese investment restrictions.
In the trend of globalization, the economies of all countries are integrated with each other. However, the practice of the US has always been a contradiction.
Since Trump took office, the US has continuously strengthened the power of CFIUS to limit investments for China. Chinese companies have been suspended many times due to the strict review of CFIUS. The latest one was Sept 13, 2017. Trump first signed a presidential decree to suspend overseas investors’ acquisition of US companies giving the reason of endangered national security. By vetoing a Chinese-invested investor, the Canyon Bridge Fund, to acquire the US chip maker Lattice, the failed deal was the result of CFIUS's decision. At present, CFIUS's review of Chinese investment in the US is already very strict. It is conceivable that with the increase of CFIUS's power, China's investment in the US will face a more serious situation in the future.
China has been striving to resolve trade disputes between China and the US. However, the US has accused China but hopes to expand its exports to China, reducing its trade deficit and increasing employment. However, it has set up various barriers, using various if not normal measures and improved its power to expand CFIUS to restrict China’s investment in the US, such as unconventional investigations. This paradoxical approach is not conducive to the economic ties between China and the US, restricting Chinese investment is also not conducive to creating job opportunities in the US. This kind of approach has bucked historical trends and it will harm both sides.
Chinese companies have always made positive contributions to promoting local economic development and employment in the US. China’s investment in the US has brought countless employment opportunities to US citizens and promoted US economic development. According to a report jointly issued on US-China Relations by the National Committee and the Rongding Group, in 2015, Chinese companies directly invested more than $15 billion in the US, of which greenfield investment transactions reached $1.8 billion. Chinese companies have more than 1,900 affiliates, and have operations in 42 states in the US. The total number of employees has reached 90,000, a three-fold increase in three years. Chinese company Fuyao Group has become a successful example of investing in greenfields in the US. At present, Fuyao Group has invested more than $1 billion in Michigan and Ohio, which have suffered the most severe industrial impact in the “rust zone”, and employs more than 4,000 Native American workers. If the US continues to increase restrictions on Chinese investment in the US, the work of these people will be greatly affected.
Chinese companies investing in the US have been hit hard by Trump's trade policies. According to the data from Rongding Consulting, China’s direct investment in the US fell sharply by 92 percent year-on-year to $1.8 billion in the first five months of this year. At the same time, the "Business Survey Report on US-China Enterprises in 2018" issued by the China General Chamber of Commerce-USA (CGCCUSA) shows that 60 percent of the companies surveyed are most worried that the Trump administration will impose high tariffs on imported products, and 14 percent of respondents believe that increased trade barriers by the government may lead them to reduce their investment in the US.
More seriously, the Trump administration is now ready to resort to tariffs for launching trade wars. It claims to raise tariffs on China’s hundreds of billions of dollars in goods. According to the statistics of the think tank Brookings Institution, if this Sino-US trade war starts, it will affect 40 industries in the US and cover about 2.1 million job opportunities.
And according to the annual report released by the Sino-US Business Council on April 30, 2018, US exports to China began to grow strongly in 2017 after two years of decline, creating 1 million jobs for the US within one year. If the trade war starts, it is conceivable that millions of people in the US will be negatively affected.
The US self-contradictory points are also manifested by the fact that the Trump administration has announced that policies such as tax cuts and deregulation will provide a more favorable environment for foreign companies to invest in the US. On the other hand, the erratic policy changing makes foreign investors generally worried about the credibility of trade policies. This uncertainty in trade policy will offset the positive impact of US tax reforms, perturb global industrial supply chains and increase operating costs. Some multinational companies, including Chinese companies, are concerned about the stability of the US investment environment and the continuity of policies for a period of time in the future. The multiple trading partners affected by the US unilateral trade protection practices have became one of the main factors which affect global cross-border investment and economic growth.
Trump’s capricious trade policy and investment restriction have begun to “hoist him with his own petard”. Recently, Harley-Davidson decided to shift the production lines of its various models from the US due to the increase in EU import tariffs to reduce the loss of profits. The new 31 percent import tariff of the US took effect on June 22, which led to a significant increase in the export cost of Harley-Davidson motorcycles. According to Harley, due to the tariff issue, the export cost of each of its motorcycles will increase by about $2,200. GM in Detroit also warned the government that about 40 percent of its cars and trucks sold in the US will come from imports. So the tariff war will make it necessary to reduce jobs in the US. It is conceivable that if Trump continues to adopt such a policy, it will greatly undermine the domestic investment environment, so that more local US companies "run away from home" and survive in other countries, which will bring huge unemployment.
The US was once the leader in globalization. Expanding openness and attracting foreign investment is its meaning. Restricting Chinese investment bucks historical trends and economic laws. It is undermining not only the improvement of Sino-US relations, but also to the employment of the country. The general public in the US and around the world will be the ultimate victims. Practice will prove that this approach will ultimately be unsustainable.
Wang Huiyao is president of the Center for China and Globalization.The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
China’s positive enthusiasm for embracing extraneous investment in the past 40 years of reform and opening up, contrasts with the United States praising the banner of “US priority” and ideology to restrict extraneous investment, and it has also rejected employment opportunities offered from abroad. This is not only unfavorable to the investor country, but also detrimental to positive development of the US.
Recently, the "Select USA" 2018 Investment Summit was held in Washington. Most of the participating agencies believe that the administration of US President Donald Trump’s series of unilateral trade protectionist policy measures have caused widespread concern among global investors.
According to Reuters on June 28, the US Treasury Department suggested to Trump to use the Committee of Foreign Investment of the US (CFIUS) to control investment transactions, and new legislation by the US Congress will strengthen the power of the committee. Trump believes that it will strengthen the national security review process for preventing China from acquiring US sensitive technology, which is more "moderate" than targeting Chinese investment restrictions.
In the trend of globalization, the economies of all countries are integrated with each other. However, the practice of the US has always been a contradiction.
Since Trump took office, the US has continuously strengthened the power of CFIUS to limit investments for China. Chinese companies have been suspended many times due to the strict review of CFIUS. The latest one was Sept 13, 2017. Trump first signed a presidential decree to suspend overseas investors’ acquisition of US companies giving the reason of endangered national security. By vetoing a Chinese-invested investor, the Canyon Bridge Fund, to acquire the US chip maker Lattice, the failed deal was the result of CFIUS's decision. At present, CFIUS's review of Chinese investment in the US is already very strict. It is conceivable that with the increase of CFIUS's power, China's investment in the US will face a more serious situation in the future.
China has been striving to resolve trade disputes between China and the US. However, the US has accused China but hopes to expand its exports to China, reducing its trade deficit and increasing employment. However, it has set up various barriers, using various if not normal measures and improved its power to expand CFIUS to restrict China’s investment in the US, such as unconventional investigations. This paradoxical approach is not conducive to the economic ties between China and the US, restricting Chinese investment is also not conducive to creating job opportunities in the US. This kind of approach has bucked historical trends and it will harm both sides.
Chinese companies have always made positive contributions to promoting local economic development and employment in the US. China’s investment in the US has brought countless employment opportunities to US citizens and promoted US economic development. According to a report jointly issued on US-China Relations by the National Committee and the Rongding Group, in 2015, Chinese companies directly invested more than $15 billion in the US, of which greenfield investment transactions reached $1.8 billion. Chinese companies have more than 1,900 affiliates, and have operations in 42 states in the US. The total number of employees has reached 90,000, a three-fold increase in three years. Chinese company Fuyao Group has become a successful example of investing in greenfields in the US. At present, Fuyao Group has invested more than $1 billion in Michigan and Ohio, which have suffered the most severe industrial impact in the “rust zone”, and employs more than 4,000 Native American workers. If the US continues to increase restrictions on Chinese investment in the US, the work of these people will be greatly affected.
Chinese companies investing in the US have been hit hard by Trump's trade policies. According to the data from Rongding Consulting, China’s direct investment in the US fell sharply by 92 percent year-on-year to $1.8 billion in the first five months of this year. At the same time, the "Business Survey Report on US-China Enterprises in 2018" issued by the China General Chamber of Commerce-USA (CGCCUSA) shows that 60 percent of the companies surveyed are most worried that the Trump administration will impose high tariffs on imported products, and 14 percent of respondents believe that increased trade barriers by the government may lead them to reduce their investment in the US.
More seriously, the Trump administration is now ready to resort to tariffs for launching trade wars. It claims to raise tariffs on China’s hundreds of billions of dollars in goods. According to the statistics of the think tank Brookings Institution, if this Sino-US trade war starts, it will affect 40 industries in the US and cover about 2.1 million job opportunities.
And according to the annual report released by the Sino-US Business Council on April 30, 2018, US exports to China began to grow strongly in 2017 after two years of decline, creating 1 million jobs for the US within one year. If the trade war starts, it is conceivable that millions of people in the US will be negatively affected.
The US self-contradictory points are also manifested by the fact that the Trump administration has announced that policies such as tax cuts and deregulation will provide a more favorable environment for foreign companies to invest in the US. On the other hand, the erratic policy changing makes foreign investors generally worried about the credibility of trade policies. This uncertainty in trade policy will offset the positive impact of US tax reforms, perturb global industrial supply chains and increase operating costs. Some multinational companies, including Chinese companies, are concerned about the stability of the US investment environment and the continuity of policies for a period of time in the future. The multiple trading partners affected by the US unilateral trade protection practices have became one of the main factors which affect global cross-border investment and economic growth.
Trump’s capricious trade policy and investment restriction have begun to “hoist him with his own petard”. Recently, Harley-Davidson decided to shift the production lines of its various models from the US due to the increase in EU import tariffs to reduce the loss of profits. The new 31 percent import tariff of the US took effect on June 22, which led to a significant increase in the export cost of Harley-Davidson motorcycles. According to Harley, due to the tariff issue, the export cost of each of its motorcycles will increase by about $2,200. GM in Detroit also warned the government that about 40 percent of its cars and trucks sold in the US will come from imports. So the tariff war will make it necessary to reduce jobs in the US. It is conceivable that if Trump continues to adopt such a policy, it will greatly undermine the domestic investment environment, so that more local US companies "run away from home" and survive in other countries, which will bring huge unemployment.
The US was once the leader in globalization. Expanding openness and attracting foreign investment is its meaning. Restricting Chinese investment bucks historical trends and economic laws. It is undermining not only the improvement of Sino-US relations, but also to the employment of the country. The general public in the US and around the world will be the ultimate victims. Practice will prove that this approach will ultimately be unsustainable.
Wang Huiyao is president of the Center for China and Globalization.The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
