US and Chinese local govts boost investment

Top officials from provincial and city levels in both countries continue to strengthen efforts aimed at closer cooperation between the world's two largest economies, reports Ding Qingfen

After news of Chinese investment proposals being turned down in the United States and called threats to US national security, the prospects of Chinese investment in developed nations might seem to be worrisome.

But some positive signals have appeared over the past few weeks, and China is expected to herald a new wave of investment in the world's largest economy, given the strong commitment that Chinese local governments and US states have made to push for closer economic ties.

Since early April, a slew of governors from US states have visited China, leading large-scale business delegations. Their purposes were the same: to promote investment from Chinese provinces in their own states.

And they, of course, got a warm welcome from both the central and local governments in China.

One of those states is California. The largest US state in terms of economy organized a large business team in mid-April, consisting of more than 75 US firms, which traveled to major Chinese cities, including Beijing, Shanghai and Guangzhou.

The eight-day trip was fruitful. California Governor Jerry Brown was welcomed by the Chinese president and premier. As a key part of the journey, Brown also witnessed the signing of a memorandum of understanding to establish the China Provinces and US California Joint Working Group on Trade and Investment Cooperation, in a bid to promote Chinese investment in the US. Six Chinese provinces and municipalities are involved in the program.

"I want to encourage trade and investment exchanges during the trip and deepen economic relations with China," Brown said during his official meeting with Premier Li Keqiang in Beijing.

The newly elected premier responded warmly to Brown's overtures. "California has the longest history in the US in economic relations with China. ... I expect that your visit will promote bilateral economic ties, especially those between Chinese provinces and US states," Li said.

The governors of Iowa, Wisconsin and Virginia also came to China. And they all attended the second China-US Governors Forum, held in Tianjin on April 15 and 16.

During his meeting with the governors, President Xi Jinping said China encourages more frequent exchanges at the China-US provincial and city levels, saying such exchanges have recorded an "unprecedentedly good momentum", adding the two country's local economies complement each other.

China and the US are each other's second-largest trading partner. In 2012, the world's two biggest economies saw bilateral trade of $484.7 billion, nearly 200 times what it was when they established diplomatic relations in 1979.

And the two-way investment has been on the rise. By the end of 2012, cumulative US direct investment in China stood at $70 billion, and China's cumulative outbound direct investment in the non-financial sector in the US reached $10 billion.

But US concerns over national security have been a major challenge to Chinese investment in the nation. A report by two members of the US House of Representatives Intelligence Committee in October cited two Chinese telecom equipment firms, Huawei Technologies Co and ZTE Corp, as posing a potential national-security threat to the US.

"Economic cooperation is a very important part of bilateral relations," said Wang Xu, deputy director-general of Department of American & Oceanian Affairs at the Ministry of Commerce.

"Complaints are meaningless. What we can do is nothing but explore possibilities of enhanced cooperation."

As a major part of the drive, Wang said, it is necessary to deepen and advance the cooperation between the Chinese provinces and the US states.

Li Yong, vice-chairman of International Trade Research Institution of China, said: "We have noticed imbalanced bilateral investment relations."

The recent wave of visits to China by US state officials comes just a month after China elected its new leadership, with both the new president and premier vowing to further open up to the outside world.

Xi, who has rich working experience in local governments, has repeatedly stressed the importance of Sino-US provincial and city-level economic exchanges.

As the then vice-president, Xi paid an official visit to the US in early 2012, and the state of Iowa was a key destination of the trip. In 1983, Iowa and Hebei province became sister states, and in 1985, Xi, then a county-level government head in Hebei, visited Iowa for agricultural projects.

On the sidelines of the Second China-US Governors Forum, Iowa Governor Terry Branstad said China and the US are heralding a new starting point for two-way economic and investment relations, while Chinese provinces and the US states vow to be closer.

"We believe that the two sides will build stronger relations," Branstad said.