China could help make Amer­ica great again

In­stead of op­po­nents, the two na­tions could be part­ners as­sist­ing the Trump ad­min­is­tra­tion in achiev­ing its stated aims

China Daily European Weekly - - Cover Story - By WANG HUIYAO The au­thor is the pres­i­dent of Cen­ter for China and Glob­al­iza­tion. The views do not nec­es­sar­ily re­flect those of China Daily.

On Jan 20, Don­ald Trump took the oath of of­fice and was sworn in as the 45th pres­i­dent of the United States, but his ag­gres­sive re­marks on eco­nom­ics, trade and geopol­i­tics add more un­cer­tainty — even po­ten­tial ten­sion — to Sino-US re­la­tions. In fact, the two coun­tries are ma­jor trad­ing part­ners and ac­cord­ing the re­search Re­port on Chi­nese En­ter­prises Glob­al­iza­tion — pub­lished by the Cen­ter for China and Glob­al­iza­tion, China has be­come a net cap­i­tal ex­porter for the first time.

In 2015, China’s to­tal di­rect in­vest­ment to the US ex­ceeded the FDI amount from the US to China for the first time. Also, Chi­naUS bi­lat­eral in­vest­ment has ex­pe­ri­enced a rapid in­crease in the past few decades. This as­ton­ish­ing de­vel­op­ment has re­sulted in an im­mense spillover ef­fect for both coun­tries, pro­mot­ing do­mes­tic em­ploy­ment, up­grad­ing tech­no­log­i­cal de­vel­op­ment and stim­u­lat­ing in­dus­trial re­struc­tur­ing. Thus, the two coun­tries should pri­or­i­tize eco­nomic di­plo­macy and seek more op­por­tu­ni­ties for col­lab­o­ra­tion.

To make Amer­ica great again, Trump has promised to bring man­u­fac­tur­ing com­pa­nies back to US, and in­crease in­fras­truc­ture in­vest­ment to cre­ate more jobs for un­em­ployed Amer­i­cans. In this case, China is prob­a­bly the best part­ner Amer­ica can have to help it achieve its am­bi­tions.

It is be­lieved that dur­ing Trump’s ad­min­is­tra­tion, pol­icy ini­tia­tives will be heav­ily de­ployed to re­vi­tal­ize Amer­i­can man­u­fac­tur­ing and bring jobs back to the coun­try. Whether Trump will be suc­cess­ful in his at­tempt to en­cour­age more man­u­fac­tur­ing com­pa­nies to move op­er­a­tions to the US de­pends not only on re-shoring but also on Chi­nese man­u­fac­tur­ers.

Th­ese man­u­fac­tur­ers might be a so­lu­tion to Trump’s Rust Belt jobs prob­lem. CCG’s re­search shows that, while sec­tors for China’s out­bound in­vest­ment are quite di­ver­si­fied, man­u­fac­tur­ing comes out first. And, most im­por­tantly, pri­vate en­ter­prises have be­come the main force for out­bound in­vest­ment. More pri­vate en­ter­prises have gone up to the high-end of global value chain.

Last year, I was in­vited as a guest to at­tend Fuyao Glass Amer­ica’s open­ing cer­e­mony for its new­est US fa­cil­ity in Mo­raine, Ohio. This in­vest­ment ac­counts for $450 mil­lion, which rep­re­sents the largest Chi­nese in­vest­ment in Ohio and the eighth largest di­rect for­eign in­vest­ment in the US in the past decade. Cur­rently, this fac­tory em­ploys about 2,000 peo­ple and ex­pects to re­cruit 300-500 peo­ple more by the end of 2017. As is planned, this in­vest­ment will be en­larged to $1 bil­lion and cre­ate 5,000 jobs for lo­cal peo­ple.

Fuyao Glass is not the only en­ter­prise that is com­mit­ted to in­vest­ing in the US. Cross-bor­der merg­ers and ac­qui­si­tions are a grow­ing trend and have be­come the main fo­cus of Chi­nese com­pa­nies’ out­bound in­vest­ment. Re­sources, tech­nol­ogy, brands and mar­ket chan­nels are the main mo­ti­va­tions for cross-bor­der M&A.

In Jan­uary 2016, Chi­nese home ap­pli­ance maker Haier Group made a deal to buy Gen­eral Elec­tric Co’s ap­pli­ance busi­ness for $5.4 bil­lion. This month, Jack Ma, Alibaba ex­ec­u­tive chair­man, met Trump and laid out the Chi­nese e-com­merce gi­ant’s new plan that could cre­ate 1 mil­lion jobs for small US busi­nesses over the next five years.

An­other way for Trump to cre­ate more jobs is through an in­fras­truc­ture re­vamp. This is a chance for China to play a role, since it has a great deal of ex­pe­ri­ence in in­fras­truc­ture con­struc­tion.

China can also in­vite the US to join the Asian In­fras­truc­ture In­vest­ment Bank. China can work with the US to foster a stronger and wider col­lab­o­ra­tion in in­fras­truc­ture con­struc­tion, in­volv­ing the US, in­clud­ing by jointly ex­plor­ing mar­kets in other coun­tries.

The Chi­nese gov­ern­ment re­cently an­nounced a series of re­forms to im­prove the over­all in­vest­ment cli­mate, in­clud­ing both mar­ket ac­cess and reg­u­la­tion, which inevitably com­pete with Trump’s ini­tia­tives for at­tract­ing in­vest­ment.

The two coun­tries still have a great po­ten­tial for col­lab­o­ra­tion, and China seems the best choice as a part­ner to help the US be­come a great power again.

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