In an article published by the Guardian, Chinese investment has increased to more than $15 billion in the United States. The $15 billion was spread across a small number of transactions, 171 to be specific, with New York being the highest recipient. While investment in the U.S by China has rapidly increased, economic growth has slowed to 6.9%, a 25-year low according to the article. Many of the assets acquired by the Chinese seem to deal with manufacturing. So what are the implications of these increased investments, are the Chinese taking over? Not necessarily, as an increase in investment can pan out to nothing if not followed through with large revenue results. There must also be a demand for the goods the Chinese invests in, which there is... in America and other Western countries. The Chinese public has some demand for the products the Chinese have invested in but notably smaller when compared to other economically strong countries. Also much of what has been invested into has been goods dealing with entertainment and manufacturing, for example the production company Legendary Pictures which produced the recent Batman V. Superman movie and Pacific Rim which was a big success in China. But are these really the products, the Chinese should be spending most of there resources on, what about roads and transportation which China could really use more of outside the big cities. Chinese investment into the U.S may become the road to success for China or it could be the straw that broke the camels back.
http://www.theguardian.com/world/2016/apr/12/china-investment-united-states-15-billion-dollars
To begin with an aside, the most interesting part of the article was that in some ways, Trump is responsible for this increase, this being due to his threat of a trade war. While these purchases, Legendary Pictures, Waldorf Astoria and Omnivision, may be odd choices, these are tied to very relevant consumer goods and services.
ReplyDeleteI agree with Barr's astute observation, and on that note I think the Chinese are targeting smart investments and in markets that are popular among a high number of consumers. Foreign investment will help the Chinese economy however if things like roads and transportation are ignored at home that could undo the success of foreign investment leading to massive losses in the domestic sector. So it'll be interesting to see how China finds a balance between foreign and domestic investment.
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