China’s further globalisation offers chances

April 18, 2013 7:01 am


The United States has become the leading destination for Chinese tourists outside Asia/XINHUA-File
The United States has become the leading destination for Chinese tourists outside Asia/XINHUA-File
WASHINGTON, Apr 18 – China has arrived at the next stage of global integration as outward investment and outbound tourism are outgrowing traditional flows, which offers tremendous commercial and political opportunities for its economic partners, researchers from US consulting firm Rhodium Group said on Wednesday.

The past five years of China-US economic relations illustrated the “tectonic shift,” noted Rhodium Group research fellows Thilo Hanemann and Dan Rosen in an article published on Wednesday.

Annual outbound direct investment, which refers to investment to create new businesses or acquire equity stakes, from China to the United States has grown by more than 300 percent since 2007, according to the US Treasury Department. Rhodium Group’s China Investment Monitor pointed to an even sharper increase of up to 1,300 percent.

Rhodium also found tourism from China to the United States was substantially higher now than five years ago. The number of tourists from the Chinese mainland visiting America rocketed from a mere trickle to more than 1.5 million in 2012.

The United States has become the leading destination for Chinese tourists outside Asia, and Chinese travellers are among the top spenders of all foreign visitors.

In contrast, traditional modes of economic interaction were growing at slower or negative rates. Direct investment by US companies in China, Chinese exports to the United States and Chinese purchases of US Treasury securities were all well off their peak growth rates.

Rhodium projected the trend will continue on the grounds that China needs to shift to a more sustainable growth model, and adopting a new growth strategy will trigger a structural catch-up process in global investment and consumption.

It estimated China’s global direct investment stock to grow from its current $400 billion to more than one trillion dollars by 2020, with an increasing share of investment flowing to developed economies.

The changing nature of the China-US economic relationship may also change the political climate, said Rhodium. Now Chinese investment is increasingly creating jobs, generating tax revenue and producing other local benefits.

The Chinese firms employed 30,000 Americans at the end of 2012, up from fewer than 10,000 five years ago. The Chinese customers are also increasingly important for sustaining US jobs in export industries.

Rhodium pointed out that sustaining those flows will require a serious update of attitudes and policies.

The still fragile global economy spurred plenty of cutthroat competition to attract Chinese investors, tourists and shoppers, and the United States was putting itself at a disadvantage if it did not adapt to new realities, it added.


You may also like...

Latest Articles

Most Viewed