• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Chinese Investment: Danger or Opportunity?

    Growing Chinese investment around the world is a major international economic development. In the U.S., the story is how limited Chinese investment is beyond government bonds.

    Limitations on Chinese investment in the U.S. are not imposed by the PRC. Other than bonds, the PRC invests primarily in natural resources, and the U.S. has such resources. The U.S. is the largest natural gas producer, may top the world in coal reserves, and even has high-cost oil reserves China has shown interest in elsewhere. The U.S. also has various metal ore deposits and the world’s largest amount of arable land.

    China doesn’t invest widely in the U.S due to political interference here. For understandable reasons, Chinese investment in technology has been blocked. For less understandable reasons, the U.S. does not seem to have a consistent policy regarding Chinese investment in resources or, for that matter, manufacturing.

    The PRC’s “go global” program was essentially launched by Lenovo’s purchase of IBM’s personal computer division in late 2004. It was sharply redirected when CNOOC was not permitted to buy UNOCAL in 2005. China then turned to Australia, which draws considerably more Chinese investment than the U.S. does, even though its economy is less than one-tenth the size of the American economy. The PRC’s spending in Canada is now rising sharply. Why are these democratic American allies with comparatively small economies unconcerned with Chinese investment?

    The one use for which Chinese money is welcomed by Washington is, of course, financing massive federal deficits. There is nothing wrong with the PRC buying American debt. But the amount of debt is certainly a problem, whoever finances it. Accepting $1.5 trillion in Chinese purchases of government debt, while inhibiting far smaller amounts intended for American companies, is a policy that should be carefully examined.

    Co-authored by Subha Hariharan.

    Posted in International [slideshow_deploy]

    One Response to Chinese Investment: Danger or Opportunity?

    1. Pingback: Product Launch Formula for Thrifty Marketers

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×