China's Golden Dragon Copper Tube Group Inc established a factory in Wilcox County, Alabama last year. It promises to hire 300 local workers. [Photo/Xinhua]

South Carolina leads in attracting manufacturing Li Wenfang reports.

A delegation of economic development organizations representing 12 US states staged a road show larger and longer than its first held last year in China, a sign indicating robust Chinese investment in the United States.

The SelectUSA road show, which ran from May 18 to 29, took the delegation to Hong Kong, Shenzhen, Dongguan, Guangzhou, Shanghai, Hangzhou, Dalian and Shenyang, in southern, eastern and northeastern China.

“That tells me that US-China trade is thriving, which is good news for both the United States and China,” said Jennifer Zimdahl Galt, US consul general in Guangzhou. “Chinese investment is the fastest-growing source of foreign direct investment into the United States, and the Pearl River Delta region accounts for more Chinese FDI into the United States than any other region.”

Arun Kumar, assistant secretary for global markets with the US Department of Commerce, said: “Direct investment from China and the Pearl River Delta region is becoming an essential part of our mutual economic story and we are excited by the growth in this trend.”

China has become one of the fastest growing sources of foreign direct investment and the US has become the third- largest destination for Chinese direct investment, with $38.5 billion already moved from China to the US by the end of last year, said Luo Weifeng, vice-mayor of Guangzhou.

Businesses in Guangzhou had invested $380 million in 94 companies in the US by the end of last year.

“The government of Guangzhou encourages investment into the United States,” Luo said, pledging support.

South Carolina has received more direct investment from China in the manufacturing sector than any other state, said John Ling, managing director for China global business development of the state’s Department of Commerce.

Seventeen manufacturing projects in South Carolina have received a combined $1.3 billion in investment from China.

“When I helped with the $30 million project investment by Haier Group back in 1999, which created 250 jobs, I thought it was a huge project,” Ling said.

After the South Carolina office in Shanghai was established in 2005, three or four potential Chinese investors were arranging for field studies in South Carolina a year and since 2010, the number has increased to 15 to 20.

“Chinese investment in the US has just started but will grow very fast in the future,” Ling said.

Ling believes rapidly growing costs in China have been a major factor driving Chinese investment in the US, with comprehensive costs in some places such as South Carolina increasingly competitive.

The costs of power, industrial land and logistics in South Carolina, for example, are competitive.

The overcapacity in some manufacturing sectors in China is forcing Chinese companies to seek their next growth areas, Ling said, pointing also to the growing US market and positive performance of the US economy.

Potential Chinese investors include those with a large proportion of energy spending in their total costs and those with significant clientele in the US, he said.

The growth in Chinese investment in the US is attributable to Chinese government policy encouraging investment overseas, the desire of some companies to become international players, and the need of some to support their supply chain in the US, said Matthew Koon, economic development lead with Tractus Asia, a consulting firm.

Apart from China’s go global strategy, the highly developed high-technology industry and sound political and business environment in the US are also driving Chinese investment in the US, said Ma Yao with market research firm CI Consulting.

Real estate, high-tech, environmental technology, fuel and Treasury bonds are attracting the attention of potential Chinese investors, Ma said.

Development Advisors, another consulting company, has facilitated three Chinese-invested projects in the US, in the chemical, lumber mill and real estate sectors, said its president Patric Zimmer.

Energy, resources, information technology and industrial machinery are expected to continue to be key areas for Chinese direct investment in the US, although the absolute amounts in these sectors may not stand out in the total, said Wang Luyao, a post-doctoral fellow with the Guangdong Research Institute of International Strategies, Guangdong University of Foreign Studies.

Taking into account the relatively small scale of Chinese foreign direct investment in the US, a single project may lift the amount in a sector in a year, such as Shuanghui International Holdings’ $7.1 billion acquisition of Smithfield Foods Inc in 2013.

With the growth in high net worth individuals in China and the desire of some to increase their asset values, hotels and real estate have also received lots of attention from potential Chinese investors, Wang said.

Opportunities lie in the bilateral investment treaty being negotiated by the two countries, which, if successful, should facilitate investment, as well as the Chinese national plan Made in China 2025 unveiled by the State Council recently, which promotes smart manufacturing, she said.

During the road show in China, members of the US delegation presented the advantages of their respective states, including the location, transport network, government incentives, low costs, trained labor, sound living environment and availability of institutions of higher learning.

Representatives of Florida promoted the state as the gateway to Latin America. Talks are taking place to move some Chinese textile, medical equipment and electronics companies into Florida to better reach both the Latin American and North American markets, said Carol Fu, director of the Shanghai office of Enterprise Florida.

Guangzhou Sunshine Holiday International Travel Service Co is considering establishing an office in the US to better access information on exhibitions in the country, said Chen Heping, director of the exhibition department of the company.

Galt said: “The United States is committed to broadening the US-China relationship and to building a closer cooperative partnership through strong economic engagement at all levels.

“The recently announced Guangdong Free Trade Zone will no doubt create new opportunities for enhanced US-China trade.”

Ren Yue contributed to this story.

Contact the writer at liwenfang@chinadaily.com.cn