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  • ‘Chinese Investment, a Real Threat to US National Security? ‘

    Published on August 28, 2010

    The United States has repeatedly blocked investment from Chinese companies on national security grounds, a protectionist move that will only harm its own interests, analysts say.

    Eight U.S. congressmen recently asked the Obama administration to scrutinize a deal between Chinese telecom equipment giant Huawei and the American operator Sprint Nextel on national security grounds.

    It was not the first time Huawei’s attempts to break into the U.S. market have been stymied. Earlier its buyout attempt of 3Com was summarily dismissed by the U.S. government.

    Citing national security concerns again, a bipartisan group of 50 lawmakers in July requested that the government investigate an investment project of China’s Anshan Iron and Steel Group (Ansteel), China’s fourth largest steelmaker, which plans to establish a joint rebar venture with a U.S. partner in Mississippi.

    “It is inappropriate for some U.S. lawmakers to label regular business behavior as a move that threatens national security,” Yao Jian, a spokesman for the Ministry of Commerce, recently said about Ansteel’s investment plan.

    “I hope the United States can create a better investment environment for Chinese enterprises,” he said.

    Chinese analysts said the actions were sheer protectionism, adding that national security concerns is only a lame excuse by U.S. authorities, whose true intention is to protect the interests of domestic enterprises and industries.

    Moreover, standing up to China’s allegedly unfair trade practices can easily earn the congressmen much needed political chips in the upcoming mid-term election in November, the analysts said.

    The setback that Huawei and Ansteel suffered is only the tip of the iceberg. Actually, blocking investment from Chinese companies in the name of national security has morphed into a knee-jerk reaction that could only harm America’s own interests.

    Emcore Corporation, a U.S. fiber optics producer, announced in late June that it has abandoned a joint venture in partnership with China’s Tangshan Caofeidian Investment Corporation because the Committee on Foreign Investment in the United States “has certain regulatory concerns about the transaction.”

    Another State-owned enterprise, Northwest Nonferrous International Investment Company, was also forced to withdraw a purchase of 51 percent stake in Firstgold Corp., a gold mining firm located near a U.S. military base in Nevada.

    “Some U.S. politicians still see China through tinted glasses,” said Chen Fengying, a senior strategist with the China Institute of Contemporary International Relations.

    In their eyes, China is still a planned economy under a totalitarian regime, she said.

    “As a result, they begin to politicize Chinese investment and make it become an issue of security even before Chinese companies carry out any business activities there,” she said, “It is not fair for the Chinese enterprises,” whose regular business behavior has been constantly mischaracterized.

    Chen said that compared with the difficulties Chinese firms face in the United States, it is much easier for American companies to invest in China.

    According to Ministry of Commerce officials, U.S. companies operating in China report annual profits of at least 80 billion U.S. dollars.

    By last June, the total number of U.S. investment projects in China had exceeded 57,000 and the value of accumulated U.S. investment in China reached 61 billion dollars.

    According to the American Chamber of Commerce in China’s 2009 White Paper, about 74 percent of American businesses in China made profits and 91 percent chose to stay in China to expand their business.

    On the other hand however, the total value of accumulated Chinese direct investment in the U.S. was only 3.1 billion dollars by last June, according to ministry statistics.

    Chen said opening the American market wider to Chinese companies will definitely create many more job opportunities in the United States, a fact that U.S. politicians can’t afford to ignore as the country is still haunted by an unemployment rate as high as 9.3 percent.

    American politicians should abandon their bias and discrimination against Chinese enterprises and free themselves from the Cold War mentality, Chen said.

    “After, solving the problem of unemployment could bring much more tangible benefits for the American people,” she said.

    Source: CRI