Even with talk of a new Cold War, Chinese companies should seek stronger economic ties in the US
- Despite the harsh rhetoric between Washington and Beijing, there are opportunities for bilateral economic cooperation at the local level
- Chinese companies can boost bilateral relations by helping communities in the rust belt, for example
Nevertheless, based on our interactions with our clients, we see many from both sides continuing to support collaboration at the local level – between cities, provinces or states. Despite the rhetoric at the federal level, a number of local American officials looking to rejuvenate the economy still welcome Chinese investment.
Texas may be a deep red state that voted for Donald Trump to be president, but it nevertheless advocates closer trade and investment ties with China, through sister cities.
Houston, the fourth-largest city in the US, has substantial engagement with two Chinese sister cities, Shenzhen and Shanghai. And China is the second-largest trading partner of Houston, Texas. Shanghai donated medical supplies to Houston in the fight against Covid-19, for example.
This echoes US companies’ willingness to invest in China, as well as the recognition that foreign participation is key to establishing China’s technological leadership. Meanwhile, Beijing issued guidelines to cut red tape and protect trade secrets for US companies.
Local economic dialogue can enhance the understanding between ordinary Chinese and American citizens. In January, an article in Scientific American challenged Washington’s “China threat” narrative, saying that far from “stealing” from the US, China has contributed intellectually and financially to US scientific production.
Seven of the 10 most frequently acknowledged funding agencies in US and China research publications were Chinese. If research ties with China are cut, the US scientific community has more to lose than gain in the long term.
However, in our conversations with a number of Chinese companies, they remain enthusiastic about investing in the US as long as federal regulators do not halt their projects over national security or other concerns.
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Chinese Premier Li Keqiang on pandemic, China-US tensions and Hong Kong
The US remains a potentially profitable market for many. The Brunswick Group, however, also advises that Chinese businesses seeking to expand overseas must “bring more value to their employees, suppliers as well as local communities, and actively tell their own story”.
Chinese consumer electronics maker TCL Corp is expanding its supply chain in Asia, Africa and the Americas. Li Dongsheng, founder and chairman, believes that global markets will rebound in the second half of the year, and that expanding the supply chain in major economies is more critical than “simply selling products to them”.
Likewise, increasing Chinese investment in the heartland of America could help ease bilateral tensions.
Of course, not every cross-border investment will be easy and ultimately successful. Some investors will encounter challenges, while others will improvise and find solutions. Ultimately, people’s efforts, empathy and togetherness will go a long way.
Given the riots and protests in the US, some people may be having doubts about whether this is a good time to invest in the country. Investors are naturally concerned about social stability and may prefer to take precautionary measures, such as joining hands with several Chinese companies to form a peer group, instead of proceeding alone.
Clearly, the current situation further complicates Chinese companies’ decision-making. However, the general American public, especially those in the US heartland, probably need more economic help than ever right now.
Edward Tse is founder and CEO of Gao Feng Advisory Company. Thomas W. Pauken II is a commentator on Asia-Pacific affairs and geopolitical consultant based in Beijing, China. He is the author of the book, US vs China: From Trade War to Reciprocal Deal