Chinese firms still open to investment in US

Chinese companies are still committed to growing their businesses in the US, and are waiting for a thaw in the trade dispute between the two countries, according to a survey report released on Monday.

Investment from China in 2018 and early 2019 declined nearly 90 percent compared with 2017, according to the report conducted by the Chinese General Chamber of Commerce – USA (CGCC). Chinese investment had experienced a decade of steady growth since 2007, which reached its peak in 2016 with $56 billion landing in the US in that single year.

CGCC's survey was launched on the first day of SelectUSA Summit, an annual three-day event hosted by the US Department of Commerce to attract foreign investors worldwide.

Chinese mainland had been sending the most delegates for a good number of years. The size of its delegation dropped to second at last year's summit.

This year, it fell to fourth place, with 95 people attending, with Taiwan, South Korea and India as the front-runners and Japan fifth.

While Chinese investment in the US has seen a large drop recently, Chinese companies have created thousands of jobs, contributed to the American economy and have helped revitalize many local communities.

For the majority of the 240 Chinese companies that participated in the survey the US remains a key investment target, with 55 percent of respondents saying it is among their top three market priorities.

According to CGCC, its Chinese member companies have invested more than $120 billion in the US, directly employ more than 200,000 people, and indirectly support more than 1 million US jobs.

The annual report, now in its sixth year, shows that most Chinese companies reinvest the majority of their profits into the US, with 58 percent indicating that all of their profits are reinvested. The percentage of those respondents grew by 7 percent compared with last year's survey.

The survey, conducted earlier this year, however, also suggests that the ongoing trade dispute and the overall less-amicable US-China relations have become Chinese companies' top concern while investing in the US, with 75 percent of respondents citing the complex relationship as one of the key challenges they are facing now.

Seventy-seven percent of respondents state that they had been adversely impacted by the tariff policy, and among those, 45 percent say they will delay future investment in the US until both countries reach a deal. Thirty-eight percent intend to adjust their global supply chains in order to avoid tariffs.

For Justin Kocher, senior manager of business development at JobsOhio, the state's economic development arm, the survey's data related to tariffs reflects a holding pattern.

"We see a number of projects on hold. People are very cautious and sensitive about proceeding with their greenfield investments in the US. They want to see how the trade war plays out. The (investment) activities have been strongly diminished," Kocher said during a panel discussion after the report's launch.

On top of tariffs, the US has been taking a more strict approach when it comes to reviewing foreign investment, especially Chinese investment. The Committee on Foreign Investment in the US (CFIUS), a US federal agency overseeing foreign investment as it pertains to national security, has expanded its review scope to include many sectors.

In August 2018, the US Congress passed a new law, titled the Foreign Investment Risk Review Modernization Act (FIRRMA), further expanding CFIUS' authority.

In the meantime, China started to adjust its policy toward outbound investment at the end of 2016, which also slowed the flow of the Chinese investment into the US.

For Jeff Liu, president of Fuyao Glass America, the US subsidiary of the largest auto- glass manufacturer in the world, tariffs pose a problem, but his main goal is to strengthen Fuyao in the US, even more amid uncertain times. He especially aims to build a good company culture that can earn employees' trust.

"Tariffs are not something you can do something about, but there are some things you can always do by yourself," said Liu.

"When the good time comes, you are stronger and you can grow better," Liu said.

Fuyao's main factory in Moraine, Ohio, employs more than 2,400 -people, who voted to not unionize in a story that drew headlines.

Fuyao opened a second factory in South Carolina in 2018, after the trade dispute erupted.

"Our clients wanted us to be close to them, so we made the move. We are committed to the US market," Liu said.

Even though demand from the US market is still strong, as in Fuyao's case, and the US state and local governments still earnestly embrace Chinese investment, 52 percent of survey respondents believe that the investment and business environment in the US did decline in 2018, a number more than double that of last year's result of 23 percent.

Respondents also indicated that they grasp the complexity of the regulatory, tax and legal environment in the US, which often experiences sweeping changes, such as the recent changes to tax policy and financial regulation.

To Craig Allen, president of the US-China Business Council and former assistant deputy secretary of commerce for China affairs, the reason for welcoming more Chinese investment to the US is clear, despite the ongoing difficulties in the bilateral relationship.

"America needs more Chinese investment, and China needs more American investment. We'll all be better off," said Allen, who moderated the panel. "I hope Chinese companies are successful and profitable and employ a lot of Americans. We shall grow together because if we don't grow together, we will suffer together."