Why China won't 'own America' anytime soon
- By Geoffrey Murray
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China.org.cn, August 8, 2011
Out of curiosity, I did some research into who is really investing heavily in the US business sector – ignoring the debt issue – and it's clear that China is nowhere in sight, the IMF calculating its American investments as 0.16 percent of its gross GDP.
In 2010, the biggest foreign investor in the US was Switzerland ($42bn), followed by the UK, Japan, France, Germany, Luxembourg, Netherlands and Canada. Chinese companies invested $2.81bn in US projects or acquisitions during the first nine months of the same year, according to CNN money.
The US Department of Commerce reported the top ten individual corporate investors in 2009 came from Japan and Netherlands (three each), Germany (2), and the UK and Switzerland (1 each).
Yet, I don't see the any of the pundits suggesting these countries are in a position to "own" America?
It is going to take some, perhaps many years, before China is able to match the outward investment activities of any of these countries, let alone the United States, which remains the world's number one investor abroad.
But this issue of "foreign ownership" does have some validity, although not quite in the way the American cartoonists suggest.
Australia is a case in point. It has enjoyed a massive boom in its exports of minerals thanks to the construction-fuelled rapid growth in Chinese demand.
Reporting on this phenomenon a couple of years ago, the respected British weekly magazine The Economist adopted a tongue-in-cheek approach in the story intro: "If you have trouble finding a taxi in Perth (capital of West Australia) or ordering a restaurant meal, blame China."
It then explained that huge orders for iron ore and other minerals being dug out of the ground in remote desert areas had lured many young workers (such as taxi drivers and waiters) from the city because of the high wages on offer by the labor-short mining companies.
But, there is less joking now. The Australian Treasury Department recently expressed its concern at Australia's growing dependence on the China minerals trade to maintain economic stability. If the Chinese economy were to suffer a significant slowdown, it warned, Australians might find their affluent lifestyle considerably undermined.
Investment and ownership of foreign currency and foreign debt has both positive and negative aspects. In the case of China they engage the country more closely in the global economy and also mean it has to be circumspect to avoid precipitating a global economic crisis that it could greatly damage its current drive to create a moderately-affluent society.
One can see this concern in the way the Chinese State media took the US to task for alleged "irresponsibility" in the handling of the recent debt crisis (and not forgetting it was reckless US mortgage lending) that triggered the most recent international financial debacle.
The Chinese government frequently talks about a "win-win" situation in its promotion of trade and investment links with the world. Let's hope cool heads will prevail so it doesn't become "lose-lose".
English-born Geoffrey Murray is a former Vietnam War correspondent and long-time writer on Asian affairs who now teaches writing at a top university in Beijing.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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