American job creation 101: stop fretting over Chinese investment
3) A measured stance would give the U.S. more negotiating power and improve diplomacy
The interest that Chinese companies have shown in investing money in America could suddenly give officials on Capitol Hill more leverage when it comes to negotiating trade issues and economic policies with its East Asian neighbor, China expert Dan Rosen told Fortune in May.
The U.S. already depends a lot on China for everything from clothing to electronics. Even amid the world's economic uncertainties, exports from China to the U.S. in July rose 38.1% to $145.5 billion, widening the trade surplus with the U.S. by 46% to $28.7 billion. And though China has cut its holdings on U.S. Treasury notes and bonds recently, it's still America's largest creditor next to Japan. As of July, China held 10% of the $8.18 trillion in publicly traded U.S. debt.
At the same time, China has huge stakes in the U.S., as it overwhelmingly depends on U.S. demand to drive its export-led growth. Encouraging Chinese investment could only help America's negotiating powers by giving China an even larger interest in the US economy. It might just give U.S. lawmakers that extra edge to smooth issues (from human rights to tariffs) between East and West.
"I lived in Ohio in the 1970s and 1980s, when Japanese automakers were investing in what we then called the rust belt -- that investment not only created employment that was welcome, but it also helped diffuse trade tensions with Japan," Lampton says. "The Chinese are taking a page from the Japanese playbook."
4) It doesn't matter. Regulators will do what's best
It's pointless for U.S. lawmakers to make huge public stinks over national security concerns. While these are valid issues that need to be thoroughly addressed, they are mostly a sideshow. U.S. regulations will ultimately dictate how Chinese companies behave in our markets. And more importantly, they will decide whether these companies have the bona fides to operate in the U.S.
