With the U.S. economy doing slightly better yet still sucking wind, and on the occasion of heir apparent Xi Jinping’s visit to America, China overseas investment is again a topic of conversation. U.S. state governors and Department of Commerce officials have been beating this drum for a very long time, but the numbers are not looking so good these days.

From the Washington Post:

The Obama administration has made seeking Chinese investment a priority, with an eye toward creating more American jobs. But the flow of funds dropped sharply last year, and experts say the task is complicated by a perception that the United States is an unfriendly place for Chinese investors.

With Ambassador Gary Locke taking the lead in the effort, American officials are trying to overcome a sense here that the United States is hostile to Chinese investment; that national security concerns pose insurmountable obstacles; and that members of Congress, local politicians and sometimes even the media will vocally oppose attempts by “Red China” to acquire or put money into struggling or start-up American firms.

I wonder why that is? For a quick and dirty answer, do a search on China Hearsay for “China bashing” and read a few of my old posts. There is a lot there to choose from.

You have to sympathize with American governors, though. Many of them are representing states that have shed millions of jobs in the past couple of decades, and there is no doubt that a great number of those jobs have ended up here in China. Politicians in Michigan, Pennsylvania, Ohio (just to name a few) hear from their constituents about unemployment, and it sure is easy to blame China for global economic trends. And yet, at the same time, they realize that China trade and investment would be a welcome boost. It’s not always easy to satisfy both the Chamber of Commerce and protectionists at the same time, not without some rhetorical sleight-of-hand, that is.

This same problem also goes for Senators and Congressmen, although they are not always as mired in local issues as governors. Unfortunately, this sometimes allows them to run wild with foreign policy or cultural memes, like the “Communist China as trade law cheat,” or “Authoritarian China as rising military threat,” or even “Red China, atheist baby killer.” These are all fine and dandy things to talk about on the campaign trail or in constituent pamphlets, but it doesn’t exactly help your state attract foreign investment.

But my guess is that it’s rather difficult to campaign in a place like Ohio and promise all the laid-off auto workers that if elected, you will be the champion of . . . better worker retraining. Yeah, that probably falls a bit flat on the stump. On the other hand, promising them that once in office, you will fight the dirty rotten Chinese trade scofflaws, well, this resonates in the heartland.

It also doesn’t help to have racist, China bashing advertising during the Superbowl. Not too many folks here in China (aside from expats) watch that particular sporting contest, but word did eventually get around. Doesn’t exactly scream “Welcome! We’d love your investment.” I’m sure that governors all over the U.S. are wishing Pete Hoekstra, proud purveyor of the political pulp in question, would just go away.

Over the years, many people have told me that I overemphasize China bashing on this blog. It’s all political rhetoric, they say. No one really takes it seriously. Beijing is too smart to believe nonsense from rubes like Hoekstra or Donald Trump.

I don’t think so. Even if the idiocy of Pete Hoekstra’s ad or Mitt Romney’s campaign blather is dismissed, it adds to all the other China bashing to create an unfriendly environment. And remember that although there may be a great deal of information about the U.S. out there on the Intertubes, that doesn’t mean that the folks making China investment decisions are perfectly informed and understand the difference between rhetoric and policy.

Consider the issue of national security. There is a common belief here in China that the U.S. uses its national security review structure (i.e. the CFIUS process) to block Chinese investment. What is this belief based on? Mostly the CNOOC-UNOCAL energy deal and a couple of deals involving the telecom firm Huawei. In fact, the vast majority of China investment deals go through without a fuss, and without fanfare, although CFIUS has become more active in recent years.

No one talks about successes, just failures and possible problems. That’s how journalism works (not to mention blogs). And the Pete Hoekstra “Yellow Girl” ad, which inexplicably re-imagines modern China as 1970s Vietnam, gets a lot more attention than the latest potatoes-for-chili-peppers trade deal between Idaho and Sichuan Province (I made that up — poetic license).

What’s a Chinese investor to do? The news he reads from the U.S. is full of nasty, often factually incorrect rhetoric about China, and this is then reinforced by domestic criticism of American protectionism, also often factually incorrect. “Feel good” trade missions from U.S. governors are hard pressed to combat all of this propaganda.

Is there any solution in sight? Sadly, no. Nationalism is an effective political tool, both here in China and in the U.S., and unless the bilateral trade deficit shrinks dramatically and the world economy recovers, politicians will feel the need to use scapegoats to explain away uncomfortable realities.

© Stan for China Hearsay, 2012. | Permalink | 5 comments | Add to del.icio.us
Post tags: China bashing, foreign investment, overseas direct investment, protectionism