VEDP has assessed world markets and views China as a significant source of potential investment into Virginia. Much has changed in the past ten years with China’s economy, and the result is that Chinese companies are actively looking to invest in job-creating projects outside of China.
As the fourth largest economy in the world, China has U.S. dollar reserves of approximately $1 trillion. Investment made by Chinese companies from 2001 to 2007 totals $109 billion ($6 billion into the U.S.), and 29 Chinese companies are on the 2008 Fortune Global 500 list (Canada has 14, Germany 37 and the UK 34).
In many respects, the drivers for Chinese investment into the U.S. mirror the reasons why Japanese companies began investing in the U.S. in the 1980s. Some of these drivers include a national policy that encourages investment by Chinese companies in other countries, a desire to move closer to customers rather than simply supplying from afar, and a desire to overcome protectionist sentiment in the U.S. China prefers expanding to higher value positions in the supply chain, aspires to continue growing the Chinese economy and seeks to grow market share particularly in sectors where Chinese brands can compete.
The Wall Street Journal’s June 3 headline, “China Firm to Buy Hummer,” affirms the trend for increased Chinese investment in the U.S. economy. Virginia should do all it can to gain a piece of the Chinese investment pie in these early formative days where trends are established and jobs are at stake.