Potential for Cooperation

U.S. investment in China has helped China readjust its economic structure, improve management and bring Chinese companies closer to the world by showing just how positive establishing business relations with them can be.

By the end of June 2011, U.S. foreign direct investment (FDI) in China had reached US $66.9 billion. In Hunan Province alone, 754 investment projects were inaugurated by U.S. companies before 2010, with contracted foreign capital having reached US $2.27 billion. Sixteen U.S. companies ranked in world's top 500 have set up branches in China.

Coastal Shandong Province is an even more successful example. By the end of 2010, the province had received investment of US $6.94 billion from the U.S. More than 5,800 U.S. companies had invested in Shandong, including 46 of the world's top 500 companies such as GM, GE, Caterpillar, Microsoft, Coca-Cola and Pepsi.

At present, however, the funds flowing from the U.S. to China are much greater than the other way round. By June 2011, China's FDI in the United States had only just surpassed US $5.1 billion. Although the scale of China's investment in the U.S. is still relatively small, it is growing at an impressive rate. This represents a great help to the U.S.'s stagnating economy.

Cui Tiankai points out that investment by Chinese companies in the U.S. has been growing rapidly in recent years. Companies from different provinces have made great contributions to boosting the U.S. economy and employment in it. Cooperation in clean energy, bioscience and infrastructure are particularly booming. Robert Hormats holds that the flow of investment between the two countries is mutually beneficial, and the two sides are expected to promote the growth of this kind of activity in both quantity and quality, creating more jobs in the process.

Five years ago, when Bradley Gillenwater joined the Maryland Department of Business and Economic Development to take charge of Asian investment in Maryland, there was only one Chinese company registered in the state. Since then, another 12 companies have joined it. "While other countries are in an economic downturn, the U.S. should work closely with the thriving Chinese economy," Gillenwater says. During a visit to China in June 2011, Martin O'Malley, governor of Maryland, and his delegation signed investment agreements valued at US $86 million, including a US $40 million program by China's Tasly Group to build a research and production base for traditional Chinese medicine.

Alabama plans to develop a diversified industrial structure after its former commodities industry crumbled during the financial crisis. The state will focus in particular on aerospace technology and bioscience. Robert Bentley sensed the passion of Chinese investors as soon as he took up the post of governor of Alabama in 2011. In March 2011, Golden Dragon Precise Copper Tube Group from Henan Province chose Thomasville, Alabama as the location for its US $100 million copper tube manufacturing facility that is expected to produce high-end copper products. Governor Bentley, a former doctor and owner of a chain of clinics, is familiar with bioscience and expects strong cooperation in this field.

China's leading electrical appliance producer, Haier Group, set up its first regional headquarters in New York a decade ago and established a manufacturing base in South Carolina. According to Zhao Hongzhu, Haier is just one of around 700 enterprises from Zhejiang that have invested in the U.S. He gives the example of the Wanxiang Group, which has established 24 branches in the U.S. and provided locals with 5,600 jobs.

Each of China's 34 provinces and the U.S.'s 50 states boast unique features that provide great potential for cooperation between regions. In recent years, the two countries have witnessed rapid development in communication and cooperation that have benefited people on both sides of the Pacific.

Looking Ahead

As Sino-U.S. relations continue to develop, the desire for cooperation between the two countries is on the rise. CPAFFC received 11 governors, six lieutenant governors and numbers of leaders of state councils from the U.S. in 2011. This U.S. leadership attendance is the most impressive in the organization's history. Li Xiaolin believes it shows an enthusiasm in cooperation and a trend in exchanging subnational-level viewpoints.

The forum built a new bridge between Chinese provinces and U.S. states to further understanding between the two peoples and make positive contributions to a developing partnership based on mutual respect and benefit.

Li Sanghua is director of the U.S. Affairs Department in the CPAFFC.