Steve Chiotakis: The World Economic Forum is going on right now in China. At the forum’s opening session, China Premier Wen Jiabao said he has confidence in the U.S. economy. But Wen also said the U.S. should open its market more to investment by Chinese companies, saying it would help create more American jobs. Is he right?
Marketplace’s China bureau chief Rob Schmitz reports.
Rob Schmitz: It all depends on what kind of investment a Chinese company wants to make in the U.S.
Michael Pettis: An investment that builds a factory, builds a piece of infrastructure — that creates jobs. An investment in which the ownership of an asset is transferred from one to another — that doesn’t create jobs.
Michael Pettis is an economist at Peking University. He says these days, Chinese companies are more interested in acquiring a U.S. company than building U.S. infrastructure. In other words: no new jobs — and, most likely, no new investment.
Not that there’s been much. That’s because whenever a big Chinese company is shopping for investments in the U.S., Congress usually gets suspicious about the reasons, says Pettis.
Pettis: If you’re buying for strategic reasons, for military reasons, for political reasons, or if you’re buying to transfer technology back home; There are many reasons why you might be buying besides simply the fact that you’re going to make a good return on your assets.
China’s already becoming a hot-button campaign issue, so don’t count on too much investment or job creation from China anytime soon.
In Shanghai, I’m Rob Schmitz, for Marketplace.
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