D. Dowd Muska


The Chinese Are Coming, and Bringing Jobs

April 21, 2016

The 90,000 U.S. workers who owe their livelihoods to Chinese firms probably aren’t keen on Donald Trump’s plan to wage economic war on America’s third-largest trading partner.

Don’t tell the Donald, but the number of domestic jobs provided by companies based in the People’s Republic is approaching six figures. So discovered the National Committee on U.S.-China Relations, in a report prepared with the Rhodium Group.

Last year, “Chinese investments in acquisitions, new operations, and expansions in the U.S. grew to more than $15 billion … setting a new record. The number of Chinese-affiliated companies in the U.S. exceeded 1,900 by year-end.”

Chinese foreign direct investment (FDI) was essentially zilch when the 21st century began. But as the country acquires more dollars, it’s rapidly pursuing mergers and acquisitions -- as well as launching greenfield projects -- in America, its largest customer. M&A activity in 2015 included “Fosun’s purchase of Ironshore Insurance ($2.4 billion), Anbang’s acquisition of the Waldorf Astoria hotel in New York ($1.95 billion), Yantai Xinchao’s investment in Texas oil fields ($1.3 billion), and a consortium’s purchase of semiconductor firm Integrated Silicon Solutions ($800 million).”

Factory-building remains a minority of Chinese FDI, but “growth in [the] category now outpaces M&A growth.” Last year, “68 Chinese greenfield projects broke ground, including large projects such as Yuhuang Chemical’s $1.85 billion methanol plant in Louisiana, Tranlin Paper’s $2 billion paper plant in Virginia, and an auto production facility by Geely-owned Volvo in South Carolina. Other big Chinese greenfield developments that were already under construction, such as Fuyao’s auto glass plant in Ohio and Yanfeng’s auto interiors plant in Tennessee, also made significant progress last year.”

For now, China’s not particularly concerned with red vs. blue -- it invests just about everywhere. Gritty, decaying Toledo wouldn’t appear to be a prime target for FDI. But in 2013, The New York Times covered the “improbable and remarkable relationship” between the city and the Middle Kingdom. It all started when the Toledo Museum of Art imported glass (ouch) panels for an expansion. Since then, “ties between Toledo and China have grown numerous. Chinese companies have paid more than $10 million in cash for two local hotels, a restaurant complex and a 69-acre waterfront property. Mayor Michael P. Bell has taken four trips to China in four years in search of investors. His business cards are double-sided, in English and Chinese.” To the south, in Moraine, the aforementioned Fuyao factory is seeking 2,000 employees for a facility that already employs 1,400.

Another unlikely spot for Chinese investment: Springfield, Massachusetts. Home of the Naismith Memorial Basketball Hall of Fame, the city is also known for corruption, crime, and blight. But it’s enjoying new jobs, courtesy the China Railway Rolling Stock Corporation, which is building trains for the Massachusetts Bay Transportation Authority. The manufacturer has partnered with Vertex Rail in North Carolina, and in March, beat Bombardier for a contract to replace half the Chicago Transit Authority’s rail fleet.

There’s more. Sinomax Group, a manufacturer and distributor of foam products, plans to create 350 jobs in Tennessee. The Volunteer State will gain anther 220 positions when the Wonderful Group, a maker of tile and ceramics, builds a production center. Suzhou Glacier Import & Export expects to employ more than 100 at a textile factory in South Carolina.

Services play a role, too. Novogene Bioinformatics Technology just announced, in Sacramento, the establishment of its “first genomic center in the U.S.” The Committee’s report explores the “obvious potential” for tourism: “China’s middle class is large and increasingly eager to travel overseas. The number of outbound trips to the US surpassed 2.5 million in 2015 and the U.S. Department of Commerce projects Chinese tourist arrivals to exceed 5 million by 2020 (spending related to these trips counts as US services exports).”

To anti-globalization blowhards, in “Chimerica,” trade flows only one way. Jobs and wealth leave the Land of the Free, and “we” get nothing in return. Well, maybe something -- cheap goods, bought by “unpatriotic” Americans. (A new Associated Press-GfK survey found that given the choice “between $50 pants made in another country or an $85 pair made in the United States ... 67 percent say they’d buy the cheaper pair.”)

But as the data on Chinese investment coming to America pile up, year after year, it will be harder for protectionists to peddle their poppycock. Another obstacle, one hopes, will be a vocal and visible community of workers who publicize the fact that were it not for China, they wouldn’t have jobs.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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