C OvER STORY
Relations and the New York-based consultancy Rhodium Group in
November 2016. The research is based on foreign direct investment
(FDI) transactions between the two countries from 1990 to 2015 and
highlights the turning point in 2015 when the FDI flow from China
to the US outstripped that going in the opposite direction. Stephen
Orlins, president of the committee, noted at the presentation of the
report at the Center for China and Globalization (CCG), a think
tank in Beijing, that Trump would be tough on trade, but would
welcome any green-field investment which would bring jobs.
Recently, the potential for Chinese companies in the US’s antici-
pated infrastructure spree has attracted a lot of attention after Trump’s
election, particularly after the first Xi-Trump meeting. Chinese For-
eign Minister Wang Yi said that the two leaders “agreed to explore
practical cooperation in many fields including energy and infra-
structure.” According to a report by the 21st Century Business Her-
ald, Trump met a group of Chinese and US infrastructure business
leaders on April 12 local time, when New York and New Jersey Port
Authority held a seminar with Chinese and US companies on how
the public-private-partnership model can be used to build infrastruc-
ture projects there. Chinese participants not only included China
Construction America, which already has a strong presence in the US
market both as a constructor and investor, but also the financial giant
the Industrial and Commercial Bank of China.
In China-US relations, energy cooperation can serve as a new “sta-
biliser” when trade looks much less effective as serving as the conven-
tional “cornerstone,” wrote Li Zixin of the China Institute of Inter-
national Studies in his article for China Petroleum Daily on April 18.
On his way back home on April 7, Xi met with Governor Bill Walker
of Alaska, a resource-rich state. With the energy market today be-
ing a buyers’ market, Li does not think it a good idea for the Trump
administration to aim to become an energy exporter while waging a
trade war against China.
Despite all this, there is little doubt that China has to prepare for
a more difficult business relationship during the Trump administra-
tion. Zhang Ming, a researcher with the Chinese Academy of Social
Sciences and Pangoal, a Beijing think tank, warned in his recent paper
that a moderate or partial trade war is still very likely once US eco-
nomic growth declines again and the country blames others such as
China for that. The US stock market may go down after rising rapidly
for some time. Trump’s fiscal stimulus plan may not be as strong as ex-
pected and the Federal Reserve is showing a hawkish attitude towards
monetary policy. All this, he said, would put downward pressure on
the US economy.
Chinese enterprises needed to pay more attention to “local politics”
in the US, remarked Tang Beijie, Deputy Secretary-General of CCG
at the press conference for their report on China-US cooperation on
infrastructure on April 5. She explained that local contractors, finan-
cial institutions and suppliers in the US would turn to their political
connections to put pressure on outside competitors. In addition, at a
local level, Americans show little enthusiasm towards some new infra-
structure projects as they will mean higher tax bills. The CCG forecast
seven opportunities for partnership between Chinese and US partici-
pants in US infrastructure projects, including manufacturing, venture
capital in the high-tech sector and public-private partnerships.
The headwind against investment heading to the US could also
grow stronger. There is not much optimism in China or the US of
a conclusion to the bilateral investment agreement in the short run.
In addition, Rhodium said in a report on December 30, 2016, there
was not only a “surge in letters opposing individual Chinese acquisi-
tions in 2016,” but also “serious efforts underway on Capitol Hill to
prepare legislation that would expand the mandates of CFIUS [the
inter-agency Committee on Foreign Investment in the US] to review
Chinese and other foreign transactions.”Other Partners
While bilateral trade ties seem to face uncertainties, China is in
search of other potential partners. And there happen to be opportu-
nities, and partly thanks to US policy. Trump is putting into action
his campaign commitment to go against the current trend of glo-
balisation. He withdrew from the Trans-Pacific Partnership (TPP). In
March, the US Trade Representative Office released the 2017 Trade
Policy Agenda and 2016 Annual Report of the President of the United
States. It expresses explicit disappointment towards the world’s cur-
rent multilateral trading system and makes it clear that abandoning
TPP paves the way to a bilateral rather than a regional, multilateral
approach. During his campaign, Trump described the World Trade
Organization and the North American Free Trade Agreement as a
“disaster.” Trump’s winning of the election itself has been regarded
as one of the two greatest symbols of a retreat, or even a reversal, of
economic globalisation. The other is the British referendum decision
to leave the European Union.
In contrast, in his speeches at the World Economic Forum in Da-
vos and the United Nations Office at Geneva, Switzerland, in Janu-
ary, Xi Jinping repeatedly defended economic globalisation and op-
posed protectionism. International media interpreted his remarks as
a sign of China’s willingness to take over from the US the lead role in
economic globalisation.
China’s role in economic globalisation has become an increasingly
controversial topic among Chinese experts. In his article on the online
Chinese language version of the Financial Times on March 30, Chen
Jianqi of the Party School of the CPC Central Committee argues that
it is in China’s own interest to defend the rules of economic globalisa-