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The U.S. Should Welcome Infrastructure Investments from China

Jun 30 , 2016
  • Thomas Petri

    former representative for Wisconsin's 6th Congressional District - See more at: http://www.chinausfo

Last December, Congress passed a $305 billion highway bill that was signed with hours to spare before the nation’s road and transit spending ran out. While this bill was the first long-term national transportation spending package in over a decade, it was unfortunately a drop in the ocean, especially in comparison to the world’s other major economies. I have never been reminded more of America’s transportation woes than on a recent trip to China.

It is no secret that America’s infrastructure has been crumbling for years. In January of 2015, the American Enterprise Institute found that since 1960, government spending on highways has dropped by nearly 50% in proportion to total government expenditures. The American Society of Civil Engineers recently gave America’s overall infrastructure a grade of D-plus, suggesting we must spend $3.6 trillion by 2020 to bring it back up to an acceptable level. Not only is our infrastructure not properly maintained, we are also struggling to deliver to the American public what it demands: the most efficient and first-rate transportation available. The current state of our transportation infrastructure causes urban traffic congestion, slow-moving trains and flight delays. The effects have obvious consequences, such as lower productivity, increased carbon emissions and a lower quality of life.

China, on the other hand, has invested significantly in infrastructure, both at home and abroad, which led the country to being crowned the largest investor and builder of infrastructure in the world. On a visit to Beijing, Chongqing and Shanghai with the U.S. Association of Former Members of Congress hosted by the China-United States Exchange Foundation, our delegation of five former members of Congress met with government and business leaders to discuss a wide range of issues. While the conversations were dominated by the South China Sea and the upcoming U.S. presidential election, I couldn’t help but speak about the spectacular state of China’s highways and rail systems.

Finding funding for infrastructure projects in the United States has been far more difficult than in China, where Beijing seems to be regularly appropriating investment into landmark projects. However, in recent years, China has offered to invest, not only in U.S. infrastructure projects, but also in other industries. According to a recent study by the National Committee on U.S.-China Relations, Chinese foreign direct investment in the U.S. set a new record in 2015 with more than $15 billion in growth. Chinese-owned operations now span 80% of all U.S. congressional districts and employ more than 90,000 Americans.

In the state of Wisconsin, we have received almost $600 million in Chinese investment from 2000 to 2015. There are currently 14 Chinese-affiliated establishments, providing more than 1,300 jobs to Wisconsin citizens. However, Chinese investment in Wisconsin, and the Midwest, still significantly lags behind that of the east and west coasts.

Even with this recent growth, the U.S. has outsourced very few infrastructure projects to Chinese firms. Only five road and bridge projects, worth a mere $100 million, have been financed by Chinese firms, accounting for only 1 percent of China’s total investment in engineering contracts in the world. Despite being the U.S. being the largest recipient of Chinese investment in 2015, very few of these investments went to construction and infrastructure projects.

China’s global infrastructure projects in over 70 countries have helped grow its expertise and efficiency in delivering quality and cost-effective infrastructure projects, placing it in a unique position to aid the U.S. with our infrastructure and funding woes. Recent attempts to address this need, such as the Los Angeles/Las Vegas high-speed rail line, have fallen through due in large part to the high barriers to foreign infrastructure investment in the United States.

Numbers aside, there is often a sense of insecurity when Chinese projects and investments are mentioned. The same resentment was expressed almost 30 years ago when Japanese investments were perceived as a threat to the United States. However, in 2016, Japan’s economy and investments are viewed as integral to the American economy, helping to strengthen the strong alliance that we have nurtured in the post-World War II era.

While national security must of course be taken into account when considering foreign direct investment, it should not prevent foreign investors from aiding the United States in critical infrastructure and transportation projects. Instead of posing a security risk, the solutions to maintaining and upgrading our infrastructure present an unrealized opportunity to minimize our differences with China and to increase our bilateral cooperation, bringing closer together the two largest economies in the world.

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