Chinese Investment

Published on Author Mitchell Brister

The Chinese economy seems to be expanding overseas. They are being encouraged to invest in other economies including the USA. this has been met with mixed feelings. One the one hand Chinese investment could lead to more jobs and growth. People are wary of an expansion of China’s power, control, and government. This article points out that a similar thing happened with Japan a couple of decades ago. The Japanese investment in the US was also feared but due to the huge economic growth and many jobs created from the expansion, is now a welcome part of the economy. Will the same thing happen with China?

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4 Responses to Chinese Investment

  1. In my opinion, Chinese investment in the American economy, while potentially off-putting at first consideration, could certainly be beneficial in the long run. China already possesses an immense amount of American debt, and the idea of China investing in the US and gaining control of American capital seems worrisome. However, given our current mountain of debt and concern about the job market I think we should welcome investment in hopes of economic growth and expansion which in turn will lead to more jobs.

  2. I think there are some substantial differences. First off while Japan was seen as a trade predator in the 1980s by undercutting domestic markets with cheap goods the same as China is doing now, the world is a lot more used to the influences of other countries as the world has become accustomed to globalization. Secondly, economists today have a better grasp of how trade deficits and surpluses work and are aware that China’s trade surplus can’t last forever. The U.S. trade deficit with China fell by a considerable margin last quarter (though I haven’t looked up why). Finally Japan has been a strategic ally of the U.S. since the end of WW2 and while the U.S was wary of Japan aggressive trade policy for economic reasons, China also poses some ideologically concerns.

  3. I think we can find a connection between this post/article and the one that I posted about the competition. I said economics is about collaboration, not competition.
    US has already borrowed a substantial amount of money from China. There is no reason why US will deny or fight against the investment. As you mentioned, people might be afraid that China will take over everything, but I do not think that will happen (just like the Japan case). I think it will certainly help the economic growth in the States. One thing I am worried about is though the workings conditions. There might be more jobs but it is also possible that it can lower wages, etc.

  4. Define “investment” — I think here you mean “direct foreign investment”. But if a country has a trade surplus, then it accumulates foreign assets [or if it’s a debtor, decreases its net debt].

    So would not prudent investment management suggest that some of these assets be invested in the shares of companies rather than in bank deposits and bonds? That can take the form of a Chinese company buying a US company, but at a macro level it’s a shift in the composition of the foreign assets it holds.