Billy Huang

Opinion | Chinese investment is saving American factories and manufacturing despite the trade war, even though Trump won’t admit it

Despite trade tensions, from Ohio to Kentucky to Louisiana, Chinese FDI is building factories and creating jobs. State governors welcome and court Chinese investment; Trump should start listening to them

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Billy Huang

Published: 3:00am, 23 Jan 2020Updated: 6:18am, 23 Jan 2020

The US-China phase-one trade deal, under which Beijing committed to huge purchases of agricultural products, is a shot in the arm for farmers in America’s heartland. But the overall picture still looks grim, especially for Chinese investment in the US.

According to global research firm Mergermarket, purchases of US firms by Chinese buyers has plummeted by 95 per cent, from US$55.3 billion in 2016, to US$3 billion in 2018.

It can be argued that with China purchasing more US farm goods, more jobs will be created, so why bother so much with foreign direct investment? Well, not all jobs are created equal. With FDI, multinationals build plants or research facilities and tend to pay employees better salaries than in the US private sector. For US heartland states suffering job losses for decades, FDI is needed more than ever.

There are big gaps in the discourse on Sino-US economic relations. At the national level, Washington sees Beijing as a rival with a “100-year scheme” to unseat the US as the world’s top powerhouse and has spared no effort to impede it. But, at the business level, deals from China, particularly in FDI, have not stopped, and have started to yield great results.

Over the past few months, I had the chance to meet several figures in charge of economic development in the US heartland states. They show great enthusiasm for Chinese investment and I came away with the clear message that Chinese capital has played a great role in local economic growth and continues to be welcome.

Chinese entrepreneur Cho Tak Wong, chairman of major glassmaker Fuyao Group, is also known in the US as the star of American Factory, an intriguing Netflix documentary about him investing in and running a local plant in Dayton, Ohio. Ohio loves him and the state sent a delegation to New York earlier this month to applaud Cho for winning an entrepreneurship award. Cho told me at the dinner that he will employ 300 more people this year on top of the 2,000 employees.