Op-Ed Contributors

Challenges investors face in US, EU

By Orville Schell (China Daily)
Updated: 2010-09-01 07:51

Indeed, a case similar to Unocal arose this summer. The Anshan Iron and Steel Group, a Chinese SOE, tried to buy a 20 percent interest in Mississippi-based Steel Development in the hope of setting up a re-bar plant in the US.

News of the pending deal prompted 50 Congress Representatives from the US steel caucus to write a letter to Treasury Secretary Timothy Geithner, calling for an investigation into the threat the deal posed to US national security and American jobs.

Nonetheless, the latest spurning of Chinese efforts to invest in the US comes when capital-poor and job-scarce America (where unemployment is more than 10 percent) could truly benefit from more receptivity to investment from capital-rich China.

One might think the US government would be actively courting Chinese investment, not scaring it away unnecessarily. If American officials do not begin to recognize the realities of today's globalized world, the US may unwittingly (and self-destructively) find itself cut off from the kinds of new foreign investment flows that are sorely needed to revitalize its manufacturing and infrastructure sectors.

The bitter new reality is that the US and "old Europe" have recently edged closer to becoming "developing countries". Indeed, it may be a painful recognition, but America's share of worldwide foreign direct investment is now half of what it was two decades ago.

If the Barack Obama administration and EU officials cannot figure out the proper mix between economic engagement and protecting national security, investment capital from China will go elsewhere. That is a strategy that will leave the US and the EU weaker, not stronger.

The author is director of the Center on US-China Relations at the Asia Society.

Project Syndicate.

(China Daily 09/01/2010 page9)