When Pigs Fly: China Business Turns to USA Markets for Profit Growth

June 24th, 2012
in econ_news

Econintersect: Checking the calendar, it is not April 1st.  Here is a snippet from a ChinaDaily USA article:

Some of China's best-known brands plan to double sales in the United States over the next few years, executives said at a June 14 forum in Atlanta on Chinese investment.

All this in the context of a continuing USA economic expansion in the face of slowing China growth and European recession as suggested by recent PMI's.  For those of us who follow economic dynamics, having the USA come in ahead of the pack is akin to watching a car race where all the cars broke down on the first lap except one which continued with a flat tire.

Follow up:

The ChinaDaily article was not without interesting commentary.

These giants were early entrants, but Chinese investment in the US is still in its infancy, said Dan Rosen, a partner with New York consulting firm Rhodium Group and the keynote speaker at the Atlanta conference.

Chinese companies make up less than one-third of 1 percent of investment in the US, the world's largest recipient of foreign direct investment, according to Rhodium's China Investment Monitor.  But since the mid-2000s, things have taken off. US investment from China doubled each year from 2006 to 2010, reaching $5.2 billion before dropping to $4.5 billion in 2011.

The biggest potential hindrances to this trend continuing are "policy misgivings" among government officials and the public, both of whom are often skeptical of Chinese investors' motives, Rosen said.

States courting Chinese prospects should educate them about these possible speed bumps, and the US should stop demanding concessions for American firms in China as a prerequisite to approving Chinese investments, he said.

"We argue as ferociously as we can in DC that reciprocity should have nothing to do with the American reaction to Chinese money," Rosen said. "If other people want to put money in your economy, the answer is yes, regardless of whether they let you put money in their economy."

Readers are warned that this is talk - it will be interesting to see what the real data looks like in years to come.

Steven Hansen

Sources: Markit, ChinaDaily

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